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Author: 


New  York  (City). 


Title: 


Report  of  the  Mayor's 
Committee  on  Milk... 

Place: 

New  York 

Date: 

1917 


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New  York  (City)    Mayor's  committee  on  milk. 

Report  of  the  Mayor's  committee  on  milk,  city  of  New 
York.    New  York,  1917. 

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THE 


REPORT  OF 
MAYOR'S  COMMITTEE 
ON  MILK 

CITY  OF  NEW  YORK 


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NEW   YORK 
DECEMBER,     1917 


Date  Due 


LIBRARY 


School  of  Business 


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REPORT  OF 
THE  MAYOR'S  COMMITTEE 

ON  MILK 

CITY  OF  NEW  YORK 


NEW   YORK 
DECEMBER,     1917 


P«HMBI 


INTRODUCTION. 

The  organization  of  the  Mayor's  Committee  on  Milk  was  the  result  of  a 
correspondence  between  Health  Commissioner  Haven  Emerson  and  Mayor 
John  Purroy  Mitchel,  which  was  as  follows: 

October  1,  1917. 

To  His  Honor  the  Mayor  of  the  City  of  New  York. 
Sir: 

Allow  me  to  call  your  attention  to  a  serious  addition  to  the  burden  of 
all  the  residents  of  this  City  in  the  further  rise  in  the  price  of  milk,  and  to 
ask  you  to  call  a  committee  of  citizens  to  inquire  into  the  reasons  for  such 
imusual  cost  of  a  necessity,  and  to  suggest  means  for  relief  for  the 
consumer. 

A  year  ago  a  milk  strike  was  precipitated  by  the  then  yoimg,  and  but 
imperfectly  organized,  Dairymen's  League  of  milk  producers,  who  suc- 
ceeded in  imposing  their  demands  upon  the  dealers  and  distributors  of  milk 
in  the  City,  with  the  result  that  the  price  of  Grade  B  pasteurized  milk  to  the 
consumer  was  raised  from  9c.  to  10c.  The  dealers  offered  at  that  time  to 
show  all  details  of  their  financial  transactions  to  any  representative  com- 
mittee appointed  by  Your  Honor  or  by  the  (jovemor,  in  justification  of 
their  retail  prices. 

In  February,  1917,  the  price  of  Grade  B  milk  was  again  raised  to  the 
consumer  from  10c.  to  lie,  in  July  from  lie.  to  Uj^c,  on  August  1st  from 
llj^c.  to  12>^c.,  and  now  (October  1st)  from  12j4c.  to  14c.,  and  higher 
prices  are  to  be  expected. 

Within  the  past  week  the  Dairymen's  League,  which  now  controls  the 
source  of  90  per  cent  of  the  fluid  milk  reaching  this  city,  has  made  demands 
for  still  further  increases  in  the  contract  price  for  milk  for  the  next  two 
months,  and  the  dealers  have  acceded.  The  power  of  the  Dairymen's 
League  to  control  this  necessary  food  in  this  City  appears  so  nearly  com- 
plete, and  its  organization  so  well  supplied  with  funds,  from  the  contribu- 
tions by  its  members  of  Ic.  per  hundred  pounds  of  milk  per  month,  that  the 
usual  protection  of  the  public  by  competition,  and  the  normal  action  of 
the  law  of  supply  and  demand,  no  longer  exist. 

The  increase  in  the  price  paid  by  the  City  dealers  to  the  farmers, 
beginning  last  October,  developed  such  increase  in  the  supply  of  milk  that 
for  some  months  past  there  has  been  a  glut  in  the  milk  supply,  exceeding 
the  public  demand  at  the  prices  charged  to  the  consumer 

It  is  apparent  from  inquiry  among  the  families  of  the  poor,  whom  chiefly 
the  nurses  and  doctors  of  the  Department  of  Health  meet  in  their  profes- 


r 


sional  work,  that  the  use  of  milk  has  been  f^^^fy^^^f^^^Zlll 
the  increased  price.    In  some  districts  the  sales  of  mjlk  for   amily  use  have 
SLStsed  20  per  cent,  and  this  among  precisely  the  fanuhes  where  the 
Sh  and  development  of  children  depend  largely  upon  *«  generous^«- 
of  milk  instead  of  other  less  valuable  and  less  smtable  f°°d  substitutes 
such  as  the  proprietary  baby  foods  and  coarse  soups,    f "rt^«=™°'«' *"^ 
Zs  been  not  only  a  reduction  in  the  actual  amount  of  '">lk  bought  for 
T^^Tl  family  ui  but  the  mothers  have  bought  for  thexr  children  milk  of 
!  Wr  ^de^or  ;conomy  sake,  namely.  B  and  C.  instead  of  A  grade,  and 
to  this  practice,  which  has  been  increasing  throughout  the  summer,  the 
Se^:i„L  of  Health  properly  attributes  the  notable  increase  m  the  numb^ 
of  deaths  from  diarrhoeal  diseases  in  children  under  one  yean    L«t  me 
call  to  your  attention  at  this  point  the  fact  that  bread  and  m.lk  together 
supply  50  per  cent  of  the  total  food  requirements  of  all  people  above  the 

"^  f^Seam  from  inquiry  or  from  any  published  record  of  facts  that 
the  cost  of  producing  and  distributing  milk  has  increased  so  far  as  to  jus  if y 
the  prices  now  demanded.  I  am  informed  that  existing  l^ws  forbid  such 
coK>perative  acts  by  dealers  as  would  allow  them  to  ^^""^f^^^^^^^^^ 
economies  in  the  field  of  city  pasteurization  and  delivery  of  milk,  although 
these  same  laws  do  not  seem  to  be  enforced  to  prevent  the  action  of ^the 
farmers,  which  has  the  force  and  effect  of  a  controlling  monopoly. 

At  the  request  of  the  Dairymen's  I^gue,  and  m  conlerence  with  them 
and  with  representatives  of  the  dealers,  the  Department  of  Health  has 
radically  revised  the  regulations  by  which  the  sanitary  conditions  and  safety 
of  our  milk  supply  are  protected,  in  order  to  remove  suchjust  causes  of 
complaint  as  have  been  presented  by  the  industry  or  lutve  been  discovered 
by  the  Department.  These  revised  regulations  were  adopted  by  the  Board 
of  Health  on  September  27th  and  will  be  put  in  force  at  an  early  date. 

The  consumers  of  the  City  are  neither,  protected  nor  organized  and  m 
the  interest  of  their  health,  and  in  particular  for  the  sake  of  the  babies  and 
school  children  of  this  city,  I  believe  it  important  to  have  a  prompt  and 
public  inquiry  and  report  to  you  as  to  the  rights  and  possibilities  of  relief 

in  this  matter.  ...         ...      v       „.._ 

In  addition  to  the  inquiry  and  recommendation  for  action  by  your 

administration,  which  may  be  expected  from  such  a  committee  as  you  would 
appoint,  I  would  suggest  the  propriety  of  using  such  premises  m  the  aty  as 
schools,  police  stations,  hospitals,  dispensaries,  setUement  houses.  Depart- 
ment of  Health  offices,  clinics  and  Baby  Health  Stations,  for  central  points 
for  distribution  and  sale  of  bread  and  milk  and  such  other  staple  articles 
of  food  as  now  cost  an  excessive  amount  because  of  the  extravagance  and 
wastefulness  of  the  present  methods  of  local  sales  and  distribution,  if  the 

committee  approves. 

I  would  suggest  as  being  particularly  capable  to  carry  out  such  an 
inquiry  as  above  proposed,  the  following  citizens,  who  can  be  relied  upon 


^'■r-sr. 


••  I  ••■■■  t4  !>1l  i^Ml«F*^V 


to  elicit  the  facts,  give  full  publicity  to  the  rights  of  producers  and  dealers, 
and,  at  the  same  time,  keep  foremost  in  mind  the  interests  and  absolute 
necessities  of  the  constuner: 

Dr.  Charles  E.  North,  Sanitarian  and  Secretary  of  the  National 
Commission  on  Milk  Standards,  Chairman. 

Mr.  John  H.  Love,  Chairman  of  the  Committee  on  Foods  of  the 
Merchants*  Association. 

Mr.  E.  B.  Lewis,  Member  of  the  Advisory  Council  of  the  Depart- 
ment of  Health. 

Mr.  Bailey  B.  Burritt,  General  Director  of  the  Association  for 
Improving  the  Condition  of  the  Poor. 

Mr.  Hugh  Frayne,  of  the  American  Federation  of  Labor. 

In  prosecuting  the  inquiry  which  I  am  convinced  such  a  committee  could 
effectively  undertake,  I  beg  of  you  to  put  the  services  of  the  office  of  the 
Commissioner  of  Accounts  and  the  Department  of  Health  at  their  disposal. 

Respectfully, 

(Signed)     Haven  Emerson^ 

Commissioner  of  Health. 


Office  of  the  Mayor. 

October  2,  1917. 

Dr.  Haven  Emerson, 

Commissioner  of  Health,  City  of  New  York. 

Dear  Dr.  Emerson  : 

Your  request  for  the  appointment  of  a  committee  of  citizens  to  protect 
the  interests  of  the  consumer  and  inquire  into  the  causes  of  the  present 
excessive  prices  for  milk  meets  with  my  entire  approval.  The  committee 
you  have  suggested  will  certainly  insure  an  impartial  investigation. 

It  is  evident  that  the  consumers*  interests,  up  to  the  present  time,  have 
not  been  adequately  considered,  and  I  believe  a  citizens*  committee  will  be 
the  most  effective  way  of  getting  at  the  rights  in  the  matter  and  seeing  that 
all  possible  recourses  for  relief  are  considered. 

Such  practical  recommendations  as  they  make  will  have  the  hearty 
support  of  the  City  administration,  and  if  any  facilities  are  needed  which 
are  available  to  the  City  departments,  they  will  be  at  the  service  of  this 

committee. 

I  am  inviting  the  citizens  whom  you  have  suggested  to  serve  imme- 
diately and  organize  promptly  for  the  investigation. 


Very  truly  yours, 
(Signed)    John  Purroy  Mitchel, 


Mayor. 


•OH^ 


Organization  of  Mayor's  Committee  on  Milk. 

On  October  4,  1917,  Mayor  Mitchel  appointed  the  following  men  to 
serve  as  members  of  a  Committee  on  Milk: 

The  Mayor's  Committee  on  Milk. 
Dr.  Charles  E.  North, 

Consulting  Sanitary  Expert  (Chairman), 
30  Church  Street. 
Mr.  John  H.  Love, 

Chairman  of  Food  Problems  Committee,  New  York  Merchants' 
Association. 
Woolworth  Building. 
Mr.  E.  B.  Lewis, 

J.  M.  Horton  Ice  Cream  Co., 
205  East  24th  Street. 
Mr.  Bailey  B.  Burritt, 
General  Director, 

Association  for  Improving  the  Condition  of  the  Poor, 
105  East  22d  Street. 
Mr.  Hugh  Frayne,* 

American  Federation  of  Labor, 
2  East  23d  Street. 
Dr.  Erxest  C.  Levy  was  appointed  Special  Investigator. 

Offices  were  provided  for  the  use  of  the  Committee  in  the  building 
occupied  by  the  Department  of  Health,  and  the  assembly  room  in  the  same 
building  was  set  aside  for  the  holding  of  hearings. 

On  October  8th,  four  days  after  appointment,  the  Committee  received 
the  following  letter  of  instructions  from  Mayor  Mitchel : 

Office  of  the  Mayor. 

October  8,  1917. 
To  the  Mayor's  Committee  on  Milk. 

Gentlemen  : 

The  question  which  you  are  considering  is  by  no  means  new.  Its 
gravit>-  has  long  been  recognized  by  the  community  and  acutely  felt  by  the 
poor.  For  some  time  I  have  done  everything  in  my  power  to  impress  on 
the  Legislature  the  need  of  relief.  After  long  delay  the  Legislature  has 
taken  action  which  makes  it  possible  to  intercede  for  the  benefit  of  the 
community. 

Please  consider  at  once  the  desirability  of  the  establishment  by  the  City 
of  a  pasteurizing  plant  in  which  milk  for  the  City's  institutions  could  be 
pasteurized  for  the  City,  the  City  purchasing  direct  from  the  producers  or 
their  representatives.  Is  the  establishment  of  such  a  plant  practicable? 
Would  it  be  economically  sound  ?  Is  there  any  simpler  way  of  securing  for 
*  Mr.  Wm.  Collins,  of  the  American  Federation  of  Labor,  acted  for  Mr.  Frayne. 


the  City,  in  its  purchase  of  milk,  assurance  of  the  elimination  of  unjust 
profits  ? 

In  view  of  the  recent  sharp  rise  in  the  price  of  milk  and  the  threat  of 
a  further  price  increase,  I  request  your  Committee  to  study  and  report  also 
upon  the  possible  advantages  of  the  establishment  by  the  City  of  a  system 
of  pasteurization  and  distribution  for  the  communitj"^  as  a  whole.  The  duty 
of  considering  this  action  has  been  placed  squarely  upon  us  by  the  Legisla- 
ture. The  act  "  to  define  the  policy  of  the  State  of  New  York  in  relation 
to  the  production,  supply  and  control  of  the  distribution  of  the  necessaries 
of  life,  and  to  insure  an  adequate  supply  thereof  at  a  reasonable  price," 
authorizes  action  by  the  municipality  whenever  the  City  is  faced  with  actual 
or  threatened  deprivation  of  necessaries  by  reason  of  excessive  profits  or 
otherwise.  The  soaring  price  of  milk  is  a  case  in  point.  If  the  present 
uncontrolled  commercial  system  of  handling  milk  causes  waste  in  the  method 
of  delivery,  or  opens  the  door  to  excessive  charges  due  to  private  control, 
we  must  find  means  whereby  the  burden  thus  unnecessarily  and  unjustly 
placed  upon  the  community  can  be  removed.  Between  excessive  profits  and 
the  lives  and  health  of  children,  there  can  be  but  one  choice. 

The  law  confers  upon  the  City  the  right  to  sell  necessaries  "through 
such  agencies  as  it  may  determine."  Please,  therefore,  consider  the  possi- 
bility of  establishing  a  milk  distributing  system  under  a  grant  of  franchise 
or  otherwise.  Should  any  franchise  be  granted  by  the  City,  it  must  be  on 
terms  which  place  in  the  hands  of  the  municipality  absolute  control  over 
profits,  and  the  system  must  reserve  to  the  City  ample  power  for  the  strict 
regtdation  of  the  industry.  In  this  connection,  please  look  into  the  possi- 
bility of  effecting  economies  through  the  establishment  of  a  zone  system, 
whereby  the  expenses  of  delivering  milk  in  the  City  might  conceivably  be 
reduced. 

The  existing  situation  threatens  the  lives  of  helpless  children;  its 
urgency  demands  concentration  upon  the  problem  and  its  uninterrupted 
consideration  until  a  solution  shall  have  been  found. 

Very  truly  yours, 

(Signed)     John  Purroy  Mitchel, 

Mayor. 

2.     Scope  and  Program  of  Investigation. 

Before  undertaking  its  work,  the  Committee  considered  it  necessary  to 
draw  up  a  comprehensive  plan  for  the  conduct  of  the  investigation  in  order 
that  it  might  make  the  most  economical  use  of  the  short  time  at  its  disposal. 

An  investigation  of  this  same  problem  by  the  Wicks  Committee  in  1916 
covered  a  period  of  six  months  and  revealed  the  great  magnitude  and  com- 
plexity of  the  main  problem  and  the  subsidiary  problems  involved. 

The  present  Committee  was  asked  if  possible  to  complete  its  report  by 
December  1st,  and,  therefore,  it  was  necessary'  to  plan  the  work  on  the  basis 
of  a  period  of  not  more  than  two  months  for  active  investigations. 

The  following  outline  of  subjects  for  investigation  was  drawn  up: 


Statistics  of  N.  Y.  City  Milk  Suf^ly  {S.L). 

a    Number  of  dairy  farmers. 

b    Number  of  shipping  stations  for  milk. 

Number  of  shipping  stations  for  butter. 

Number  of  shipping  stations  for  cheese. 

Number  of  shipping  stations  for  condensed. 

Number  of  shipping  stations  for  powdered. 
c    Number  of  dairy  cows.    .      ,  ^     _ _       _.    ,    -.^ 
d    Total  quantity  daily  received  by  New  York  City. 
e    Total  quantity  formerly  received  by  New  York  City. 
/    Per  cent,  from  each  producing  State— now. 
g    Per  cent,  from  each  producing  State— formerly. 
h    Per   cent   in   bottles    from   wagons 

Per    cent,    in    bottles    from    stores  ,  now  and 

Per    cent,    in    cans    from    wagons     formerly. 

Per    cent,     in     cans     from     stores. 
i     Number  of  retail  companies. 
f     Number  of  retail  wagons.  . 

k    Number  of  pasteurizing  stations,  country  and  aty. 

Sources  of  Information. 
State  Department  Agricultural  Records. 
City  Department  Health  Records. 
Wicks  Committee  Report. 
Dairymen's  League  Records. 
Milk  Conference  Board  Records. 
"Milk  Reporter."  .      ^ 

"New  York  Produce  Review." 


a 

b 
c 
d 


Market  Prices  (PJI.,  SJ.). 
By  producers*  organizations. 
By  dealers'  organizations. 
Standard  methods  for  making. 
Standard  methods  for  controlling. 


Sources  of  Information. 

Dairymen's  League. 
N.  Y.  Milk  Conference  Board. 
Federal  Food  Commissioner, 
State  Food  Commissioner. 
Cost  experts. 


SUBJECTS  FOR  INVESTIGATION  BY  MAYOR'S  COMMITTEE  ON  MILK. 

General  Questions, 

« 

1.  Is  present  high  cost  of  milk  justified? 

2.  Can  high  cost  be  reduced? 


Cost  of  Milk  Production   {PH.,  A.A.,  SJ.). 
a    On  farms  shipping  to  milk  stations. 
b    On   farms   shipping  to  butter   factories. 
On  farms  shipping  to  cheese  factories. 
On  farms  shipping  to  c'd  milk  factories. 
On  farms  shipping  to  m.  powder  factories. 
c    Standard  methods  of  cost  accounting. 
d    Variations  in  cost  due  to— 

Value  of  cows. 

Total  volume  of  dairy  milk. 

Average  cow's  production. 

Cost  of  feed. 

Food  ration  and  pasture. 

Labor  and  machinery. 

Other  farm  business'. 

Sanitary  requirements. 
e    Theoretical  vs.  practical  costs. 
/    Cow  population,  increase  or  decrease. 
g    Value  of  farm  labor. 

Sources  of  Information. 

State  Agricultural  Colleges  and  Stations. 
State  Departments  of  Agriculture. 
State  County  Farm  Bureaus. 
Selected  dairy  farms. 
U.  S.  Department  of  Agriculture. 
Country  Banks. 


Cost  of 

Cost  of  Collection— Fluid  Milk   {PM.,  AA., 

SJ.). 
a    Carrying  from  farms  to  shipping  station — 

Individual  method. 

Co-operative  method. 
b    Shipping  station  charges — 

Receiving  and  testing. 

Washing  and  sterilizing  cans  and  bottles. 

Pasteurizing,  bottling,  canning. 

Cooling. 

Supplies. 

Labor,  etc. 
c    Transportation — 

Freight. 

Refrigeration. 

Trucking. 

Ferriage. 


Suri^lus     Milk     {PJi.,    AA. 
SJ.). 

a  Normal  surplus. 

b  Abnormal  surplus. 

c  Regulation   of   surplus. 

d  Manufacture. 

e  Storage. 


Prices  and  the  Consumer  {SJ.). 
EflFect  of  prices  on  quantity  consumed.  ^ 

Effect  of  prices  on  morbidity  and  mortality  of  in- 
fants and  children. 
EflFect  of  prices  on  general  health. 
Fffect  of  prices  on  tuberculosis. 
EflFect  of  prices  on  use  of  milk  substitutes. 


a 
b 

c 
d 

f    Effect  of  prices  on  special  sections  of  city. 

Sources  of  Information. 

Milk  distributors'  records. 

N.  Y.  Citv  Department  of  Health  records. 

Infant  milk  station  records. 

N.  Y.  A.  I.  C.  P. 


Distribution. 

Cost  of  Delivery  (PJI.,  AA.» 
SJ.). 

a    City  Station- 
Pasteurization. 

Bottling. 

Refrigeration. 

Washing  and  sterilizing. 

Accounting  purchases. 
b    Delivery — 

Horses  and  wagons. 

Drivers'  wages. 

Loss  on  bottles. 

Shrinkage. 

Accounting  sales. 


Sources  of  Information. 
Milk  distributors'  and  employees'  testimony. 
Milk  distributors'  books. 
Railroad  freight  agents. 


P.H.=Public  Hearings. 
A.A.=Auditing  Accounts. 
S.  I.=Special  Investigations. 


Prices  of  Fluid  Milk,   Versus  Milk  Products    iP.H., 

a  Price  fluid  milk  vs.  surplus  milk. 

b  Price  fluid  milk  vs.  butter. 

c  Price  fluid  milk  vs.  cheese. 

d  Price,  fluid  milk  vs.  condensed. 

e  Price  fluid  milk  vs.  powdered. 

/  Price  milk  and  milk  products  vs.  oleomargarine. 

Sources  of  Information. 
Milk  dealers. 

Dealers  in  milk  products  (Comm.  Merchants). 
Trade  Journals. 


Can  Cost  be  Reduced?  {PJi^ 

A.A.,   ^J..j. 

a    Cost  of  production. 
b    Cost  of  distribution. 


Sources  of  Information. 
All  branches  of  investigation. 


t|  j 


* 

y 


p 


11 

The  method  of  securing  information  on  the  several  subjects  was  through 
public  hearings,  auditing  accounts  and  special  investigations  and  it  was 
proposed  to  do  this  work  through  the  following  channels : 

Mechanism  of  Investigations  by  Mayor's  Committee  on  Milk. 

(P.H.)    Public  Hearings— 

(a)  For  producers : 

Large  dairy  farmers. 
Small  dairy  farmers. 
Producers  for  fluid  milk  market. 
Producers  for  butter. 
Producers  for  cheese. 
Producers  for  other  milk  products. 
Producers'  organizations. 

(b)  For  experts  on  cost  of  production : 

From  colleges  of  agriculture. 
Coimty  farm  bureau  agents. 
State  agriculture  and  dairy  officials. 
Federal  agriculture  and  dairy  officials. 

(c)  For  distributors: 

Officers  of  distributing  companies. 

Superintendents  of  country  shipping  stations. 

Milk  buyers. 

Managers  of  city  milk  plants. 

Managers  of  city  retail  departments. 

(d)  For  consumers: 

Managers  of  infant  milk  depots. 
Officers  of  charitable  organizations. 
City  health  officials. 
(A.  A.)     Auditing  Accounts — 

(a)  Of  producers: 

Farm  accounts. 
Producers'  organizations. 

(b)  Of  distributors: 

Large  retailers. 
Small  retailers. 

■ 

Wholesalers. 
(S.  L)     Special  Investigations — 

(a)  To  verify  testimony  at  hearings. 

(b)  To  verify  figures  in  accounts. 

(c)  To  secure  statistics  of  supply. 

(d)  To  show  conditions  among  producers. 

(e)  To  show  conditions  among  distributors. 
(/)  To  show  conditions  among  consumers. 
(g)  As  basis  for  recommendations. 

The  Committee  was  assisted  in  its  work  by  the  office  of  the  Commis-  . 
sioner  of  Accounts  of  New  York  City.    Leonard   M.    Wallstein,    Com- 
missioner of  Accounts,  acted  as  special  counsel  for  the  Committee.    He  put 
at  the  Committee's  disposal  a  large  force  of  expert  accountants. 

In  its  special  investigations,  the  Committee  was  also  assisted  by  the 


/• 


UFK  /issoaation  for  Improving  the  Condition  of  the  Poor. 

3.    Work  AccompKshcd. 
The  following  work  has  been  performed  by  the  Committee : 
i'ubhc  heanngs,  11. 

Private  conferences  with  the  industry,  6. 
Auditmg  accounts  of  producers,  17. 
Auditing  accounts  of  distributors,  16. 
Special  investigations,  10. 

repon  ZpZ>^iToLt'\T:''i'°'''''^^  »  *^  W'^""  Committee 
offtis  work3  ^Z  ^'l^''  Committee  might  have  full  advantage 

pu4etTcel?;?e  Son  o1  hT"""^  '^'^^  "«''^'  -''''='•  ^'^  -  '^^ 
A  «.,   afcertam  the  relation  of  high  pnces  to  the  quantity  of  milk  uspH 

to  12^  JthrS^rST  ''-  ^-"^'^  -^  --  °^  «nSc  waTt„rot 

to  s^i-srcr.^.sr  d- tltrr-  ;;:^t  ^rdS -^^^ 

what  economies  could  be  obtained  by  centklizing  dis'^^En  "'"^ 

secuL'T^  S  S£Z:f  ^^^"T  "JP"^*^  ^°-"^«--  ^'^^  was 

paed  f  n>m  £9!!^  L^TcLSS  l^Z  "?*  5'*^  ^"'^  «^"^  -»" 
ro.«„w     ^.  concermng  the  cost  of  production. 

P™Pl«e  audit  was  made  of  the  books  of  the  Borden's  F»rm  P    a    . 
Co.,  Inc.,  through  the  services  nf  H.,k«w.  d  it     , ."°™«"  «  i-arm  Products 

The  concisions  r^S^f/'^^Jf^fH^wtans'  *=^«'««<1  *«ou„ta„t. 

cacnea  as  a  result  of  this  mvestigation  are  as  follows  : 

per  quart  in  October,  1917.  4  <**  t  m  oepiemoer,  1916,  to  14c. 

tion  ^  fo^^c^:^  '"^•'*°"  ^"^'^^^^  '-^  -P«ed  the  following  tabula- 

From  June,  1914,  to  December,  1917  in  the  Nf.w  V„,i,  n-^ 
several  food  products  have  advanced  in  pri^  Is  f^lZsT    '  ^'^  "'^^''^*' 

-S^^a^ ______ju^i9i4_D^i,7    !;;js 

Eggs  per  doz ^,                               rr— -^ increase 

Corn  per  bu ^ty  ^-67  igi 

Pork  per  bbl ,^-72  2.00  178 

Whcat*1>er  bu.          ^^-^O  50.50  59 

Sugar  ^r  100  Ibi .-^O  2.26  151 

Oatsp^bu....  .   3.32  6.90  m 

Beef  per  lb '.[',',][[ -43                .84}^  5^ 

Cheese  per  lb •**                .32  77 

Butter  per  lb i:.::::::::;: yt        -^ty^      7$ 

Milk  per  quart -^  .47  74 

'^  .14  55 


13 

Milk,  therefore,  has  not  been  alone  in  its  rise  in  price  and  has  risen  to 
a  much  less  degree  than  nine  other  important  food  products. 

The  bulletin  published  by  the  Bureau  of  Labor  Statistics  of  the  U.  S. 
Department  of  Labor  in  November,  1917,  entitled  "  Prices  and  the  Cost  of 
Living,"  gives  a  comparative  table  showing  the  average  prices  of  food  on 
September  15th  of  each  year  from  1913  to  1917,  of  which  the  following  is 
an  extract : 


Article  Unit 

Sirloin   Steak    1  lb. 

Bacon    lib. 

Eggs    1  doz. 

Flour    1  lb. 

Corn  Meal   1  lb. 

Sugar    1  lb. 

Milk    1  qt. 


Sept.  15, 1913  Sept  15, 1917 


Per  Cent 
Increase 


.262 
.281 
.375 
.033 
.031 
.057 
.089 


.333 

27.1 

.442 

57.3 

.525 

40.0 

.073 

121.0 

.062 

164.5 

.098 

71.8 

.118 

32.6 

per  cent 
per  cent 
per  cent 
per  cent 
per  cent 
per  cent 
per  cent 


For  the  same  period  in  New  York  City  the  following  figures  are  given : 

Per  Cent 
Article Unit       Sept.  15, 1913  Sept  15, 1917  Increase 

Sirloin   Steak    1  lb.  !264  IS  39.4  per  cent 

Bacon   lib.  .262  .440  68.0  per  cent 

Eggs    1  doz.  .442  .592  33.9  per  cent 

Flour    lib.  .032  .079  147.0  per  cent 

Corn  Meal   lib.  .034  .076  123.5  per  cent 

Sugar    1  lb.  .051  .092  80.4  per  cent 

Milk    1  qt  .090  .124  37.8  per  cent 

■ 

The  average  percentage  advance  in  the  retail  price  of  the  six  food 
products  other  than  milk  shown  in  the  above  tables  was  80.3  per  cent  for 
the  country  at  large  and  82.0  per  cent  for  New  York  City.  The  price  of  the 
six  commodities  thus  advanced  2j4  times  as  much  as  milk  in  the  coimtry  at 
large  and  2%o  times  as  much  in  New  York  City. 

The  rise  in  the  price  of  milk  in  New  York  City  since  September,  1916, 
including  both  the  prices  paid  to  the  producer  and  the  prices  at  which  milk 
was  sold  to  the  consumer,  are  shown  in  the  following  table  expressed  in 
cents  per  quart: 

Dealer  Received 

Dealer         r '^ ^      Dealer's 

Period Paid  Retail    Wholesale  Actual       Margin 

September,  1916  3.46               9  6  7.32  3.86 

October,  1916— January,  1917,  4  mos.  4.67  10  7  8.32  3.65 

Feb.— June,  1917,  5  mos 4.52  11  8  9.32  4.80 

July,  1917  4.84  11J4  8^  9.82  4.98 

August  and  September,  1917. 5.94  12j4  9  10. 54  4.60 

October,   1917   7.46  14  10  11.76  4.30 

In  the  above  tabulation  the  actual  money  received  by  the  dealer  is  shown 
in  the  4th  coltunn  and  is  made  up  from  averages  allowing  56  per  cent  of  the 


INTENTIONAL  SECOND  EXPOSURE 


!t 


12 

iT^^l^^^^A^"^"^'""}  "^  ^''^'^'  ^^^  Y°^^  ^''^  Committee  and 
the  New  York  Assoaation  for  Improving  the  Condition  of  the  Poor. 

3.    Work  Accomplished. 
The  following  work  has  been  performed  by  the  Committee: 
Public  hearings,  11. 

Pri^te  conferences  with  the  industry,  6. 
Auditing  accounts  of  producers,  17. 
Auditing  accounts  of  distributors,  16. 
Special  investigations,  10. 

r^i  ''°"'^^^^^  "^'^^'^  ""^  ^"^  "'^^""^  contained  in  the  Wicks  Committee 
17^1  '^'''  r^f"^  u  """"^^  "^^  '^^  Committee  might  have  full  advantage 
t^ltT'^^^^^^  '''  -'^^^^^^  --^"^  '-  ''''  with  condl 

A  survey  of  2^200  families  of  consumers  was  made,  which  had  as  its 
purpose  to  ascertain  the  relation  of  high  prices  to  the  quantity  of  nSc  uslJ 

to  m  ntw'"^'"*'  ~""^™"?  *e  quantity  and  price  of  milk  was  sent  out 
to  1^  other  aties  m  America. 

A  questionnaire  was  sent  to  all  distributors  of  milk  in  New  York  City 
to  secure  statistics  regarding  distribution,  for  the  purpose  of  determining 
what  economies  could  be  obtained  by  centralizing  distri^tion.  ^ 

1  hrough  the  testimony  of  witnesses  and  private  investigations  data  was 

S'froX^':;  '^'T  "''^'^'"^  """^  ''^  ^'^  ^°^^  C'*y -<i  i-  CO - 

pUed  f rom  969  dairy  farms  concerning  the  cost  of  production 

Complete  audit  was  made  of  the  books  of  the  Borden's  Farm  Products 

Co.,  Inc.,  through  the  ser^ces  of  Herbert  B.  Hawkins,  a  certified  accountant 
The  conclusions  reached  as  a  result  of  this  investigation  are  as  follows: 

4.    Advance  in  the  Price  of  Milk  and  Other  Food  Products 
In  the  City  of  New  York  the  retail  price  of  milk  in  bottles  delivered  to 
houses  from  wagons  has  risen  from  9c.  per  quart  in  September,  IpTrtol^^ 
per  quart  m  October,  1917.  ' 

don  of' fo^^clJ: :  ""'"'''"  '"^'"^^^  '^^  ^^'"P^^^^  ^^^  ^^^--g  tabula- 

From  Jmie,  1914,  to  December,  1917,  in  the  New  York  City  market 
several  food  products  have  advanced  in  price  as  follows :  ' 

Commodities  T„rj*?m4  t^^"^^,-.  Per  Cent 

r- June,  1914  Dec,  1917  Increase 

£ggs  per  doz TtTTj  ZTTI — " ■ 

Com  per  bu ^^^  ^-^  191 

Pork  per  bbl .....;..;; ,o?n  c^'SS  ^78 

Wheat  per  bu ^^'^  50.50  159 

Sugar  per  100  lbs ','.['.'. ^'S  ^'^  ^51 

Oats  per  bu ^'^  ^-90  108 

Beef  per  lb .,'. S  -^^  96 

Cheese  per  lb 'if  %  ,  77 

Butter  per  lb 'tS  '^^^  75 

Milk  per  quart '%,  H  74 

'^  .14  55 


i 


13 

Milk,  therefore,  has  not  been  alone  in  its  rise  in  price  and  has  risen  to 
a  much  less  degree  than  nine  other  important  food  products. 

The  bulletin  published  by  the  Bureau  of  Labor  Statistics  of  the  U.  S. 
Department  of  Labor  in  November,  1917,  entitled  "  Prices  and  the  Cost  of 
Living,"  gives  a  comparative  table  showing  the  average  prices  of  food  on 
September  15th  of  each  year  from  1913  to  1917,  of  which  the  following  is 
an  extract : 


...  Per  Cent 

Article Unit       Sept  15, 1913  Sept.  15, 1917  Increase 

Sirloin   Steak    lib.  .262  .333  27.1  per  cent 

Bacon    lib.  .281  .442  57.3  per  cent 

Eggs    1  doz.  .375  .525  40.0  per  cent 

Flour    lib.  .033  .073  121.0  per  cent 

Corn  Meal   lib.  .031  .082  164.5  per  cent 

Sugar    1  lb.  .057  .098  71.8  per  cent 

Milk    1  qt  .089  .118  32.6  per  cent 

For  the  same  period  in  New  York  City  the  following  figures  are  given : 

A    .  ,  Per  Cent 

Article Unit       Sept.  15, 1913  Sept.  15, 1917  Increase 

Sirloin    Steak    1  lb.  .264  .368  39.4  per  cent 

Bacon    lib.  .262  .440  68.0  per  cent 

Eggs    1  doz.  .442  .592  33.9  per  cent 

Flour    lib.  .032  .079  147.0  per  cent 

Corn  Meal   lib.  .034  .076  123.5  per  cent 

Su»ar    lib.  .051  .092  80.4  per  cent 

Milk    1  qt.  .090  .124  37.8  per  cent 

The  average  percentage  advance  in  the  retail  price  of  the  six  food 
products  other  than  milk  shown  in  the  above  tables  was  80.3  per  cent  for 
the  country  at  large  and  82.0  per  cent  for  New  York  City.  The  price  of  the 
six  commodities  thus  advanced  2}^  times  as  much  as  milk  in  the  country  at 
large  and  2%o  times  as  much  in  New  York  City. 

The  rise  in  the  price  of  milk  in  New  York  City  since  September,  1916, 
including  both  the  prices  paid  to  the  producer  and  the  prices  at  which  milk 
was  sold  to  the  constmier,  are  shown  in  the  following  table  expressed  in 
cents  per  quart: 

Dealer  Received 

Dealer         / * ^      E>ealer's 

Period Paid  Retail    Wholesale  Actual        Margin 

September,  1916  3.46  9  6  7.32  3.86 

October,  1916— January,  1917,  4  mos.  4.67  10  7  8.32  3.65 

Feb.— June,  1917,  5  mos 4.52  11  8  9.32  4.80 

July,  1917  4.84  11^  8^  9.82  4.98 

August  and  September,  1917. 5.94  12j^  9  10.54  4.60 

October,   1917   7.46  14  10  11.76  4.30 

In  the  above  tabulation  the  actual  money  received  by  the  dealer  is  shown 
in  the  4th  coliunn  and  is  made  up  from  averages  allowing  56  per  cent  of  the 


% 


I 


14 

S  '::£^^t]:tx '-  "^"^^  --  -^^  ^  p^^ «-  of  the  supp,, 

a  fmction  less  than  the  r^r  lIT  P"'"  "'^'^^^^  ^"^  ^h^'esale  milk 
are  discounts  and  losseVSte  reSuottlftLT'  "  t  "'l™^"-  *«* 
retai^rice  received  a  faction  ,.s  int%SrtS,  ;t  ^^  ^^^'^^"^ 

deaieS^a^trz  iSc:^^  rhTpr-^  ^^  f -'-  -  -^ 

th^assumption  that  aH  Z^  -^ rh^sa^^ i^S  If^i^L"^ 

Questionnaire  to  123  Cinre  »^^.  ^ 

^° '^  ^'™s  R«5>«DiNG  THE  Rise  IN  Milk  Prices. 
An  inquiry  was  sent  out  to  123  riHw   ,„j       •• 
66,  including  New  York  City.  '  ^'^'"'^*  '^^''^  '«="v«<l  from 


cw.-.  W f n^o^^^„  o.,,^,  m,.  ,«  0„.»„,  ,<,„. 


Price, 
Oct,  1916 


10      11 


12 


Price,  October,  1917 
14 


6 

7 

9 

10  :;;;;;;; 

12 

*«^ 

14 

Wot  given. 

Total.. 


1 

•  • 

4 


1 

3 
3 
1 


1 
1 
4 
8 


5 
5 


8       14 


2 

12 


•  •             •  . 

4 

5     6    ;:     ;•     •• 
3     1    ;:     V     • 

•       2       1       i       i      ; 

i 

•  •     • .     . 

•     •  • 

•  • 

12 


1 

2 

8 

16 

25 

4 

5 

1 

1 

2 


1      65 


1917.  ^  ^'  °*^  ~''^*  show  the  higher  prices  paid  in 

list  of  The^efpa;JnV??  S'rZrtI*  *!  'Z'^t  ^*  ^'''^  ^-'^'  ^^  ^ 
list  shows  that  4Ss  paM  oTin  ^91^  ^  v     '  "^"'"^  "'"^  '"  ^^^7.    This 

paid  lie.  in  1916,  i^i^l  ^u"o\   tll'T  "^"^  '^^ '"  '^'^  ^^  ^  «««» 

,  giving  a  loiai  ot  1^  cities  now  paving  14c  n*»t.  /i«o,^ 


15 

From  this  same  inquiry  facts  were  secured  as  to  the  prices  paid  to  dairy 
farmers  by  the  distributor,  compared  with  prices  paid  by  the  consumer  to 
the  distributor.    Results  of  this  inquiry  are  shown  in  the  following  table : 

Price  of  Milk  Per  Quart  Paid  by  Distributor  and  by  Consumer,  October, 

1917. 


Paid  by  Consumer 

Paid  by 
Distributor 

— *^^—^ 

...  A. 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

^ 
Total 

4K 

•  • 

•  • 

•  • 

1 

5     

•  • 

•  • 

•  • 

1 

5H 

•  • 

•  • 

•  • 

1 

6      

1 

1 

1 

4 

654 

3 

3 

•  • 

7 

7     

4 

5 

5 

2 

16 

7H  

4 

4 

4 

2 

14 

8     

1 

2 

1 

4 

8H 

2 

2 

2 

6 

9     

1 

3 

4 

9J4  

*  * . 

•  • 

10 

1 

i 

i 

3 

10J4  

«  • 

11    

1154  

•  • 

12      

12H 

1 

1 

13      

•  • 

13^ 

14      

14H 

•  • 

•  • 

•  • 

15      

1 

I 

No  Distribu- 

tor   

•  • 

•  • 

1 

•  • 

•  « 

•  • 

•  • 

1 

•  • 

•  • 

2 

Total... 

5 

8 

14 

12 

12 

9 

1 

2 

1 

1 

65 

From  the  above  tabulation  it  appears,  for  example,  in  column  No.  4 
that  in  fourteen  cities  the  consumer  pays  12c.  per  quart  for  retail  bottled 
milk.  In  one  of  these,  farmers  receive  6c ;  in  three,  6j4c. ;  in  five,  7c.,  and 
in  four,  7j4c. 

In  twelve  cities  where  milk  retails  in  bottles  at  14c.  per  quart,  the  pro- 
ducer received  the  following  amount :  In  one  city  6c.,  in  two  cities  7c.,  in 
four  cities  7j4c.,  in  two  cities  8c.,  in  two  cities  8j4c.,  in  one  city  9c.  per  quart 

In  sixteen  cities  producers  received  7c.  per  quart,  in  fourteen  cities 
7j4c. 

It  must  be  remembered  that  all  milk  is  not  sold  in  bottles  at  full  price 
The  milk  sold  at  wholesale  in  cans  usually  is  greater  in  amount  than  the 
bottled  milk.  The  wholesale  milk  sells  from  3c.  to  4c.  per  quart  less  than  the 
bottled  milk. 

In  the  same  inquiry  there  was  represented  a  total  population  of 
21,067,496  people,  and  the  total  daily  consumption  of  milk  was  6,244,560 
quarts,  or  a  little  more  than  three  persons  to  each  quart  of  milk. 


.11 


r 


) 


16 

The  retail  prices,  daily  consumption,  and  other  statistics  of  the  milk 
supply  of  66  cities  is  given  in  the  following  table : 

Milk  Prices  and  Per  Capita  Consumption  in  66  Cities  (Total  Population 

21,067,496). 


Retail  Price  Per  Capita 

(Cents,  No.  of  Daily  Per  Per   Consumption 

Per  Quart)        Cities         Consumption  Cent        Population         Cent     (Quarts) 

(Quarts) 


10. 
11. 
12. 
13. 
14. 
IS. 
16. 
17. 
18. 
20. 


5 

145,800 

2.3 

700,019 

3.3 

0.208 

8 

505,000 

8.1 

1,838,208 

8.7 

0.275 

14-<2)* 

2,420,120 

38.8 

6,296,146 

29.9 

0.385 

12 

840,640 

13.4 

3,381,608 

16.1 

0.248 

13-(1)* 

2,210,000 

35.4 

8,072,932 

38.3 

0.274 

9-(3)* 

112,000 

1.8 

674,168 

3.2 

0.166 

1-(1)* 

2 

11,000 

.2 

104,415 

.5 

6.i66 

1-(1)* 

1-(1)* 

Total...       66— (9)*       6,244,560         100.0        21,067,496         100.0         0.296 

^Figures  in  parenthesis  indicate  number  of  cities  in  each  class  from  which  no  reply 
as  to  daily  consumption  was  received.  The  per  capita  consumption  is  calculated  from 
cities  giving  daily  consumpticoi. 

From  the  above  tabulation  it  appears  that  38.3  per  cent  of  the  popula- 
tion lives  in  cities  where  the  retail  price  for  bottled  milk  is  14c.  per  quart ; 
29.9  per  cent  of  the  population  pays  12c.  per  quart  for  bottled  milk  and  16.1 
per  cent  pays  13c.  per  quart  for  bottled  milk. 

5.    Statistics  of  the  Milk  Supply  of  New  York  City. 

The  following  statistics  give  figures  for  the  month  of  October  concern- 
ing the  milk  supply  of  New  York  City.  These  figures  were  supplied  by  the 
officials  of  the  New  York  City  Department  of  Health : 

Dairy  Farms  30,934 

Milk  shipping  stations 800 

Dairy  cows   400,000 

Milk  received  .  November 1,627,127  qts.  daily 

New  York  State  supplies 1,402,277  qts.  daily 

Pennsylvania  supplies  114,630  qts.  daily 

New  Jersey  supplies 58,100  qts.  daily 

Vermont  supplfes  36,120  qts.  daily 

Connecticut  supplies   9,000  qts.  daily 

Massachusetts   supplies    4,000  qts.  daily 

Canada  supplies   3,000  qts.  daily 

Milk  sold  in  bottles  from  wagons "  598,671  qts.  daily 

Milk  sold  in  bottles  from  stores 105,647  qts.  daily 

Milk  sold  in  cans  from  stores 710j654  qts.  daily 

Milk  sold  in  cans  to  manufacturers 185,750  qts.  daily 

Retail  dealers 350 

Retail   wagons    4,978 

Wholesale  wagons    1,522 

Grade  A  Raw  Milk 50,000  qts.  daily 

Grade  A  Pasteurized  Milk 170,370  qts.  daily 

Grade  B  Pasteurized  Milk 1^80,360  qts.  daily 

Grade  C  Milk None 


17 


New  York  Prices— Grade  "  B  "  Milk, 


Dates 


Price  Per 
100  Lbs. 


Price  Per 
100  Lbs. 


Price  Per 
100  Lbs. 


October  . 
November 
December 

January    . 
February 
March    . . . 

April    

May    

June   

July   

August  . . 
September 


1915 

$1.76 
2.00 
2.00 
1916 
1.94 
1.88 
1.76 
1.53 
1.41 
1.29 
1.47 
1.65 
1.72 


1916 

$2.30 
2.40 
2.40 
1917 
2.35 
2.30 
2.25 
2.20 
2.15 
2.05 
2.25 
2.70 
2.70 


1917 


$3 

3 
3 


30 

54 
30 


Prices  prior  to  October,  1916,  are  actual  prices  taken  from  "  The  Milk 
Reporter."  Prices  beginning  October,  1916,  are  Dairymen's  League  prices 
with  premium  added  for  butter  fat  content  of  3.5  per  cent. 

This  premium  was  3c.  for  each  Ko  per  cent  butter  fat  over  3.0  per  cent 
from  October,  1916,  to  September,  1917,  inclusive,  and  4c.  for  each  Ko  per 
cent  beginning  October,  1917. 

Rise  in  Prices  Paid  Producers. 


Date 


October,  1915 

October,   1916   

October,  1917   '.'.'.'.'.'.'. 

Total   increase    


Price  Per 
100  Lbs. 


Price 
Per  Qt. 


$1.76 
2.30 
3.30 
1.54 


$0.03782 
.04946 
.07096 
.03314 


6.    Value  of  Milk  as  Food. 

Prof.  Henry  C.  Sherman,  in  his  book  entitled,  "  Chemistry  of  Food  and 
Nutrition,"  shows  the  cost  of  3,000  calories  of  energy  when  purchased  in 
the  form  of  various  food  products : 


Foo<l Per  Lb. 

Clear  Fat  Pork $o.20 

Bacon    25 

Round  Steak  plus  Fat 20 

Round  Steak  Lean '20 

Eggs  (8  at  36c.  per  doz.) 24 

Oysters  (at  30c.  qt,  1  pt.) .15 

Milk— 1  pt.  at  6c.  qt 03 

Milk— 1  pt.  at  8c.  qt '04 

Milk— 1  pt.  at  10c.  qt *.*  qS 


Cost  of 
3,000  Calories 


$0.16 

.27 

.88 

1.26 

1.13 

1.90 

.28 

.37 

.46 


X 


;^ 


> 


#i 


% 


18 

In  reviewing  these  figures,  Professor  Sherman  shows  that  people  can 
afford  to  pay  20c.  per  quart  for  milk  if  they  can  afford  to  pay  25c.  per 
pound  for  beef.  The  above  statement  is  limited  strictly  to  the  food  value 
of  milk  from  the  standpoint  of  calories. 

At  the  New  York  prices  for  September,  1917,  for  all  products  but  milk 
and  the  October  price  of  14c.  for  milk,  the  same  table  would  be  as  follows : 


Food 


Price 
Per  Lb. 


Cost  of 
3,000  Calories 


Fat  Pork   

Bacon    

Steak  plus  fat 

Steak,  lean   

Eggs,  8  at  60c.  dozen. 
Milk  (14c.  qt.)  1  pt.. 


$0.39 
.44 
.37 
.37 
.40 
.07 


$0.31 

.48 

1.63 

2.33 

1.88 

.65 


Prof.  M.  J.  Rosenau,  of  Harvard  University,  states  that  the  value  of 

milk  is  as  follows: 

2  large  ^gs, 

a  large  serving  of  lean  meat, 

2  moderate-sized  potatoes, 
5  tablespoonf  uls  of  cooked  cereal, 

3  tablespoonfuls  of  boiled  rice,  or 
.2  slices  of  bread. 


A  glass  of  milk  is  about  equal  to 


From  the  U.  S.  Department  of  Agriculture  another  method  of  tabulating 
the  food  value  of  milk  is  as  follows: 


Milk  at— 


Is  as  Cheap 
as  Sirloin  Steak  at 


Or  Eggs  at 


7  cents 

8  cents 

9  cents 
cents 
cents 

15  cents 


1$ 


a  quart 
a  quart 
a  quart 
a  quart 
a  quart 
a  quart 


a 
a 

a 


16.3  cents 

18.6  cents 

21.0  cents 
^ -,  23.3  cents  a  'po,und 
^*'*'27.9  cfeits  a  pound 

34.9  cents  a  pound 


pound 
pound 
pound 


17.6  cents  a  dozen 
20.1  cents  a  dozen 

22.6  cents  a  dozen 
-/^S.l  c^nts  a  do^^en 

*^*'*30.2  cents  a  dozen 

37.7  cents  a  dozen 


Concerning  the  food  value  of  milk.  Professor  Sherman  points  out  that 
it  is  a  superior  food  in  three  respects,  as  follows: 

(1)  Its  food  value  in  protein,  carbohydrates  and  fats  was  partly 
realized  a  few  years  ago. 

(2)  Its  very  exceptional  value  as  the  means  of  keeping  a  proper 
balance  in  the  mineral  constituents  in  a  diet.  (This  refers  to  the  salts 
of  several  kinds  contained  in  milk.) 

(3)  That  it  contains  two  growth-promoting  substances  called 

vitamines. 


19 

Concerning  the  last  item  of  value  mentioned  above,  namely,  the  vita- 
mines,  most  important  and  interesting  discoveries  have  been  made  in  the 
last  three  years.  The  most  recent  work  has  been  performed  by  Prof.  E.  V. 
McCollum,  of  Johns  Hopkins  University,  who  has  followed  up  the  work 
begun  by  Professor  Osborne,  at  Yale,  and  others. 

These  discoveries  show  that  there  are  existing  in  milk  and  in  some  other 
foods,  two  unknown  substances  which  stimulate  growth.  One  of  these  is 
found  in  the  fat  and  the  other  is  found  in  the  water,  or  solution.  Their 
chemical  character  is  unknown  and  they  have  never  been  separated  from  the 
food  materials  with  which  they  are  associated. 

Professor  McCollum  has  pointed  out  that  the  seeds  of  plants  are  good 
food  so  far  as  they  go,  but  that  they  are  deficient  in  these  growth-promoting 
substances,  which  are  found  chiefly  in  the  leaves  of  all  trees  and  plants. 
They  are  found  in  such  leaves  as  cabbage,  lettuce,  spinach  and  cauliflower, 
and  above  all  in  milk. 

Concerning  milk  and  milk  products,  he  says  it  is  not  generally  appreci- 
ated that  these  articles  have  a  dietary  value  far  greater  than  can  be  expressed 
by  their  protein  and  energy  contents. 

In  experiments  on  rats,  Osborne,  Mendel  and  McCollum  have  shown 
that  the  feeding  of  butter  fat  and  of  milk  promotes  growth  in  a  remarkable 
way  for  the  reason  that  the  vitamines  or  growth-promoting  substances  are 
present  in  milk  in  an  abundance  and  in  a  form  which  is  readily  available, 
as  in  none  other  of  our  common  foods. 

Because  of  its  nutritional  value  and  particularly  because  of  its  growth- 
promoting  value,  milk  is  the  ideal  food  for  infants  and  children. 

In  testifying  before  the  Committee,  Dr.  L.  Emmett  Holt,  one  of  the 
leading  specialists  in  children's  diseases,  stated  as  follows : 

"  For  infants  during  the  first  year  a  quart  of  milk  a  day  is 
,  necessary.  For  the  second  year,  a  pint  and  a  half.  There  is  no  food 
as  economical  at  present  prices  for  the  nutrition  of  infants  as  milk. 
♦  *  *  The  habit  of  giving  tea  and  coflFee  to  young  children  is 
positively  injurious.  For  children  between  the  ages  of  two  and  six 
years,  the  daily  ration  of  milk  should  be  one  pint  per  day  as  a 
minimum. 

"  Dr.  Lucas,  of  Berlin,  found  very  greatly  increased  susceptibility 

to  tuberculosis  as  a  result  of  under-feeding  particularly  among  chil- 

■       dren.     I  should  think  that  after  six  years  6(  age  up  to  twelve  or 

thirteen  years,  a  pint  of  milk  a  day  ought  to  be  allowed  to  all  children." 

Professor  Sherman,  in  his  testimony,  said:^ 

"  We  cannot  expect  a  good  community  dietary  if  that  community 
uses  less  than  one-half  quart  of  milk  per  capita  per  day.  Unless 
there  was  that  amount  of  milk,  the  dietary  would  be  seriously  one- 
sided. The  milk  has  exceptional  value  as  a  food  for  growth  due  to 
the  so-called  vitamines    *    *    *    It  is  the  most  important  single 


*•, 


111 


1 1^ 


i 


III 


.III' 


food  for  adults.  It  ,s  more  economical  to  produce  than  meat.  A  man 
confined  to  a  bread  and  meat  diet  will  show  deficiencies,  while  a  man 
confined  to  a  corresponding  bread  and  milk  diet  will  go  on  indefi- 

rS  /  -it  ^,,^^^^^^^^^  ^iet  will  always  be  improved  by  an 
addition  of  milk.  If  ,t  was  a  question  of  one  or  the  other,  I  think  it 
important  that  a  man  have  milk  rather  than  meat." 

Prof.  Graham  Lusk,  in  his  testimony,  says: 

1  /If ""  ^^""'^^  ""^  ^""^  '^'^''^^  ^"^  "^^^t  "ntiJ  they  have  bought  at 
least  three  quarts  of  milk.    Milk  contains  not  only  protein  of  animal 

ongm  but  also  a  very  vauable  fat  which  has  specific  properties  for 
growth.  It  also  contains  in  aqueous  solution  materials  which  prevent 
the  development  of  beri-beri  and  pellagra.  Milk  is  the  cheapest  form 
of  protein  you  can  get.  It  is  the  most  complete  and  sufficient  food 
that  can  be  had  Around  the  dairy  farms  centres  the  proper  nutri- 
tion of  a  nation."  ^    ^ 

How  much  milk  should  be  used  for  drinking  purposes  by  New  York 

lSc  thi  (^r  "''   u'  ^"^"^^^^^/^^-'"'"ended  by  Professors  Sherman  and 
Lusk,  the  City  would  consume  the  following  amounts  daily : 

Quarts  of  Milk  Which  Should 

Afi^e  Population  ^  Used  a  Day ^ 

Each All 

Under  1  year 130,500  11  7;77Z, 

1—2  years ^?fi7f^  /,w    ^x     ,  130.500 

2-6.  6-14  years. . . .    i .'  i .' '   •  1  387 900  iY"^  ^ll  Yi  ^^'^ZS 

Over  14  years 4  092  392  /i^  1  ^^\  3  ^^^'^SO 

^'"^^"^^^  O  glass)  H  1,023,098 

Total  S  737  40?  

^'^-^^'^^^  1,942.573 

Milk  which  New  York  City  should  drink-1, 942,573  quarts  d^ 
Actual  amount  used  for  drinking  is  probably  about  707,486  quarts  daily. 

The  food  value  of  milk  has  been  unappreciated  by  the  public  at  lar^e 
While  as  a  food  for  babies  it  is  well  known,  it  has  been  thought  that  i   was 
not  adapted  to  adults  on  the  supposition  that  it  contained  less  LnS^^^^ 
materials  than  the  so-called  solid  foods.    Solidity  in  food  is  a  merfinSS 
due  to  the  presence  of  fibre  which  holds  vegetable  and  animal  substrnces  in 

can  be  assimilated.    The  liquid  character  of  milk  simply  means  that  it  isl 

Tnfan™  "  """'  """'  ^'^'''''  '"'  '^^^"^^^^^^  ^^  ^^^''^^  -^  well  Is] 

For  infants  it  is  not  merely  a  convenient  food,  but,  because  of  the  ores 
ence  of  the  so-called  vitamines  or  growth-stimulati^g  substances    it    s" 
vitally  necessary  for  the  development  of  infants  and  children.    Its  value  as 


m 


21 

a  food  for  adults  is  just  beginning  to  be  appreciated.  It  furnishes  to  the 
body  those  materials  which  are  most  necessary  for  the  increase  of  strength 
and  endurance. 

It  is  believed  by  those  who  have  investigated  the  subject  that  the  nations 
and  races  of  men  which  have  done  most  in  the  development  of  the  world 
and  have  shown  the  greatest  physical  strength  and  vigor  are  those  nations 
which  have  depended  to  the  largest  extent  on  dairy  products  and  milk  for 
food. 

At  14c.  per  quart  milk  is  the  cheapest  of  animal  foods.  Even  up  to  20c. 
per  quart  milk  can  compete  on  favorable  terms  with  any  animal  food  at 
present  prices. 

The  population  of  New  York  City  may  be  divided  into  certain  age 
groups  showing  the  number  of  infants  and  children  and  the  number  of  per- 
sons of  each  age  in  ten-year  periods  from  one  year  of  age  to  more  than 
seventy-five  years  of  age.     The  quantity  of  milk  used  as  a  beverage,  or  for 
drinking  purposes,  is  707,486  quarts  out  of  a  total  supply  of  1,600,723  quarts, 
the  diflFerence  being  used  for  cooking  and  manufacturing  purposes.     The 
testimony  of  Dr.  L.  Emmett  Holt  and  Prof.  Graham  Lusk  before  the  Com- 
mittee showed  how  much  milk  should  be  used  by  infants,  children  and  adults 
for  drinking  purposes  if  they  are  to  secure  the  greatest  benefits  from  milk  as  / 
an  article  of  diet.    The  quantity  of  milk  which  should  be  used  as  a  beverage  ^ 
is  1,942,573  quarts  daily,  that  is  to  say  this  quantity  should  be  used  as  a    7 
beverage  in  addition  to  the  quantity  used  for  cooking  and  manufacturing   \ 
purposes.    The  above  facts  are  shown  in  the  chart  on  page  22. 

The  upper  line  of  this  chart  shows  the  population  of  New  York  City 
according  to  the  different  ages.  It  is  notable  that  between  the  ages  of  20 
and  25  years  there  is  a  high  point  due  to  the  young  aduHs  of  both  sexes 
who  come  to  New  York  both  from  the  rural  districts  in  America  and  from 
foreign  countries.  The  lower  line  in  the  chart  shows  the  amount  of  milk 
used  as  a  beverage  at  the  present  time  by  this  population.  The  middle  line 
shows  the  quantity  which  should  be  used  if  the  people  consumed  milk  as  an 
article  of  food  in  the  quantities  which  the  scientists  state  could  be  used  by 
them  to  best  advantage.  The  difference  between  these  two  lines  shows  how 
much  should  be  added  to  the  present  milk  supply  to  satisfy  the  needs  of  the 
population  if  milk  were  properly  used  for  drinking  purposes. 

7.  The  Effect  of  Prices  on  Consumers. 
The  price  of  milk  is  of  vital  importance  to  infants  and  young  children. 
Older  persons  may  exercise  choice  and  select  their  foods,  but  infants  and 
children  have  no  choice  and  are  dependent  upon  milk.  When  children  under 
two  years  of  age  are  deprived  of  milk  and  placed  on  a  diet  of  other  food  they 
do  not  thrive.  High  prices  in  New  York  City  during  the  past  year  have 
resulted  in  changing  the  diet  of  young  children  in  the  poorer  parts  of  the 
city  from  milk  to  other  things,  or  from  milk  of  high  grade  to  milk  of  lower 
grade,  with  consequent  injury  to  their  health. 


I 


\       \ 


22 


-I 


-J 


^  !ii 


'f,00^  f^f- 


5 

^ 

^ 


23 

Reduction  in  the  Quantity  of  Milk  Consumed. 

A  milk  census  taken  in  October,  1916,  shows  the  city  was  using  1,900,000 
quarts  of  milk  a  day.  Similar  census  taken  on  October  5,  24  and  25,  1917, 
showed,  respectively,  1,411,658  quarts,  1,576,723  quarts  and  1,531,968  quarts, 
indicating  shrinkages  of  26.7  per  cent.,  17  per  cent,  and  19.4  per  cent. 
Statistics  from  large  companies  show  decreases  for  October,  ranging  from 
50  per  cent,  to  11  per  cent.,  in  various  districts  of  the  city.  These  shrinkages 
in  the  amount  of  milk  consumed  are  undoubtedly  due  largely  to  the  advances 
in  price  which  have  recently  occurred. 

A  survey  was  made  by  Bailey  B.  Burritt,  Director  of  the  New  York 
Association  for  Improving  the  Condition  of  the  Poor,  of  2,200  families  in 
various  parts  of  Manhattan  and  Brooklyn.  This  survey  required  250  investi- 
gators, composed  of  persons  in  the  employ  of  the  Association  for  Improving 
the  Condition  of  the  Poor  and  health  nurses  of  the  City  Department  of 
Health.    This  survey  is  summarized  as  follows: 

Survey  Made  Jointly  by  the  Department  of  Health  and  the  Asso- 
ciation FOR  Improving  the  Condition  of  the  Poor  for 
THE  Mayor's  Committee  on  Milk. 

(October,  1917.) 

Selection  of  Families  for  Milk  Survey. 

Aim — To  get  some  light  as  to  how  families  living  on  a  very  narrow 
margin  are  meeting  the  increased  cost  of  milk. 

Method  of  Investigation — Schedules  were  placed  in  the  hands  of  inves- 
tigators, who  made  a  house  to  house  canvass  of  a  particular  selected  section. 
Only  such  families  as  had  at  least  two  children  under  six  years  of  age  were 
considered,  and  all  families  under  the  care  of  the  Baby  Health  Stations 
or  receiving  milk  from  a  relief  organization  were  eliminated. 

Investigation— BodiTd  of  Health  Nurses,  settlement  workers  and 
A.  I.  C.  P.  field  workers  made  the  survey. 

Locations— E3ich  investigator  was  sent  to  a  selected  section  and  told 
to  canvass  each  house.  Since  there  were  250  investigators,  it  is  felt  that 
the  whole  city  is  quite  well  represented.  All  boroughs  were  represented. 
In  Manhattan  representative  sections  are  Cherry,  Mott,  Henry,  Allen, 
Warren  and  Christopher  Streets,  and  99th  to  105th  Streets  from  the  East 
River  to  Third  Avenue,  53d  to  66th  Street  from  the  Hudson  to  10th 
Avenue.  Corresponding  sections  in  Brooklyn  are  Hicks  and  Bond  Streets, 
Greenpoint,  Metropolitan  and  Thatford  Avenues.  In  the  Bronx,  Washing- 
ton Avenue  and  Lorillard  Place ;  Rockaway  Avenue  in  Jamaica  and  Spruce 
Street  in  Richmond  Hill. 

The  survey  was  made  during  the  week  of  October  9,  1917.  Of  the 
2,500  schedules  sent  out  2,200  were  used  in  the  tabulation  of  results. 


« 


* 


[ 


t 


1 


V       I 


§"' 


24 

MILK  SURVEY    (OCTOBER,   1917). 

Amount  of  Milk  Purchased,  with  Changes  since  1916. 
Number  of  families,  2,200  (each  containing  two  children  under  6  years). 

Members  of  2,200  families •  • .  •         12.439 

Adults    4,467 

Children  from  6-16 2,534 

Children  under  6  years 5,438 

Milk  purchased  in  1916—4,797  quarts  daily 

Milk  purchased  in  1917—3,193  quarts  daily  (141  cans  condensed  milk) 

Difference    1,604  quarts  daily 

Estimated  milk  needed  by  12,439  people- 
Children  under  6  years  (1  quart  each) 5,438  quarts 

Children  from  6-16  (H  Quart  each) 1,267  quarts 

Adults  one-third  quart  each 1,489  quarts 

8,194 

Details  with  regard  to  changes  in  milk  supply  from  October,  1916,  to  October,  1917. 

Number  of  families  getting  more   milk    121 

Number  of  families  getting  same  amount  599 

Number  of  families  getting  less    1.480 

Number  of  families  getting  more  condensed  milk,  420. 

Families  cutting  milk  supply— 

25  per  cent,  or  less 219 

25-50  per  cent ?69 

50-75  per  cent 169 

75-99  per  cent 3 

100  per  cent 120 

1,480 

(Of  these  120  families  dropping  milk  entirely,  73  substituted  condensed  milk.) 

Families  buying  from 

}4  to  1  quart  less 863 

1  to  2  quarts  less 449 

2  to  3  quarts  less 131 

3  to  4  quarts  less 31 

4  to  5  quarts  less o 

Of  the  1,480  families  getting  less  milk,  1,213  are  substituting  tea  and  coffee. 

Families  changing  from  Grade  A  to  B 266 

Families  changing  from  Grade  B  to  C 67 

Families  changing  from  bottled  to  loose 474 

Families  with  babies  less  than  1  year  old 982 

Of  these  982  families 

Those  buying  less  milk  than  in  1916 562 

Those  buying  same  amount  of  milk 316 

Those  bu3nng  more  milk   79 

Those  dropping  their  milk  entirely 25 

982 

Mothers'  statements — 

In  829  families,  where  milk  has  been  decreased,  the  mother  states  that  the  children 
arc  cither  losing  weight,  or  are  not  gaining.  In  these  829  families  there  arc  2,090 
children  under  six  years  of  age. 

Tea  and  Coffee— 

2,148  children  under  six  years  of  age  are  drinking  tea  and  coffee. 


25 

Nationalities  Represented. 

Italians    725 

Americans  (colored,  73) 497 

Jewish    416 

Germans  and  Austrians 220 

English,  Irish  and  Scotch 185  • 

Slav    93 

Orientals   40  • 

Danish,  Swedish  and  Norwegians 12 

French    6 

Spanish    4 

Hollander    » 1 

Greek I 

Concerning  this  survey,  Miss  Gillette,  who  had  direct  charge  under 
Mr.  Burritt  of  compiling  the  results,  testified  before  the  Committee  as 
follows : 

"  The  sections  in  which  the  investigations  were  made  were  on  the 
lower  East  Side,  such  streets  as  Cherry,  Mott,  Henry,  Allen,  Warren  and 
Christopher,  and  from  99th  to  105th  Streets,  from  the  East  River  to  Third 
Avenue,  and  oh  ihe  West  Side,  from  53d  to  66th  Streets,  and  correspond- 
ing sections  in  Brooklyn,  such  as  Hicks  and  Bond  Streets,  Greenpoint, 
Metropolitan  and  That  ford  Avenues,  and  corresponding  sections  in  the 
Bronx,  as  Washington  Avenue. 

"  We  have  eliminated  all  families  in  which  there  were  not  two  children 
under  6  years  of  age.  This  study  is  based  on  2,200  families.  There  were 
5,438  children  under  6  years  of  age.  Between  6  and  16  there  were  2,534 
children. 

"  121  families  were  getting  more  milk  than  in  October,  1916. 
"  599  families  were  getting  the  same  amount  of  milk. 
"  1,480  families  were  getting  less  milk. 
"  219  families  have  cut  their  milk  supply  25  per  cent. 
"  969  families  were  getting  25  to  50  per  cent.  less. 
"  16l&  families  were  getting  from  50  to  75  per  cent.  less. 
•  "  3  families  were  getting  from  75  to  99  per  cent.  less. 
"  120  families  were  getting  100  per  cent.  less. 
"  982  families  had  children  less  than  one  year  of  age. 
"2,148  children  under  6  years  of  age  were  using  tea  and  coffee 
as  substitutes  for  milk." 

Increased  mortality  from  diarrrheal  diseases  was  noted  in  New  York 
City  for  the  months  of  August,  September  and  October.  A  survey  of 
other  cities  in  America  shows  that  in  the  majority  of  them  there  was  a 
similar  increase  in  deaths  among  babies  from  diarrheal  diseases.  A  similar 
experience  has  occurred  in  foreign  countries  where,  because  of  war  condi- 
tions, infants  were  deprived  of  milk,  and  the  resulting  increase  in  the  death 
rate  was  promptly  checked  as  soon  as  relief  organizations  arranged  for  an 
adequate  milk  supply,  for  mothers  as  well  as  for  infants.  There  is  no  doubt 
of  the  fact  that  high  prices  and  the  shortage  of  milk  have  a  direct  effect  on 
infant  mortality. 


ii 


k  i 


) 


26 
8.     Cost  of  Production. 

.v.;>B.  CO.,  of  n,ilk  producL  u^E  pS,  Zd  ,"J    S  IT^ 

piled  includes  fi^rp«;  fmm  o^a  a  -      /         .  ^""^'"^"s.     ihe  data  com- 

milk  to  New  YoA  atv    Offl     ,  *?"^  ^uT  '"  *"  ''^  '''^'^  contributing 
of  these  Sut^tmaed^Ss'  31?^^°^'^""'^*'^  "^^'^^'^'^ 

ants  se^ired  fig^rel^t  first  L„h  f°'""""'='^^  °^"  S'""?  ^^  *«P««  ^cco^r^X- 
showcostsranS?;l^irr,rn;^tir-^^^^^^ 

chartf?i::r:?cs:ur.t^;^s^^^^^    ^Vt^h^  "r 

were  presented  in  tabular  form  as  foIlowT:  '      "^  *•"'  '*='"'*' 


Item  ^nIT'         ^■'S''"',""         Producer 

Feed   ~ ■ ■ 

Labor  $f9-40  $51.54  $68  00 

Overhead   ^^■^^  18.15  «^ 

1^-82  23.22  49;00 

Credits  $86.94  $92.91  U^l^ 

^"O  21.00  20.00 

Net  cost  per  year.  ,  

Production  per  cow..:;  .■.■.■;.■ *?  iSt  .k  ^h?^  $142.00 

Cost  100 lbs. milk .;.:::::       .i^s-m?""-  .,?;^??"'^-     soooib,. 

Cost  per  quart *«„,  $1.0911  $1,775 

-^^^^    ••■  0332    _^^^(g^  038S 

range'EtcS'iSl^^s  "^^Xtd7r;i  T^^T^ 
many  cows  in  New  England  producTe  u^der  V^  T  ""'  *"'"  "* 
exceeding  doubtful  if  Lst  ^wsT^ew  £2^°"  '  ^\  ''^'-  ''  '^ 
more  than  3,500  to  4,000  poundlper  year  ^         """  '"■°*^"*='"S  "'"*='' 

The  above  tabulation  is  objected  to  by  the  Wicks  Committee,  on  the 


27 

ground  that  the  items  for  labor  are  not  large  enough  to  cover  the  cost  of 
labor  in  New  York  State.  It  is  to  be  noted  that  in  the  year  1914  the  cost 
of  producing  milk  was  less  than  4  cents  per  quart  in  cows  producing  more 
than  5,000  pounds  of  milk  per  year.  These  costs,  however,  are  figured  on 
the  costs  of  feed  and  labor  in  1914,  which  were  much  lower  than  similar 
costs  at  the  present  time. 

The  Wicks  Committee  gathered  information  from  a  large  number  of 
dairy  herds  in  groups  and  in  individuals,  in  order  to  ascertain  the  cost 
of  producing  milk  previous  to  October,  1916.  Among  these  was  mentioned 
statistics  from  174  herds,  including  5,308  dairy  cows,  Delaware  County, 
New  York,  including  the  statement  of  the  amount  of  grain,  silage,  hay, 
pasture,  labor  and  miscellaneous  costs  necessary  for  maintaining  one  cow  for 
one  year  during  the  years  of  1911-1913,  inclusive. 

Similar  figures  were  gotten  from  the  herd  of  cows  at  St.  Lawrence 
University,  New  York,  from  42  herds  in  Oneida  County,  New  York,  from  a 
dairy  herd  at  Cobleskill,  New  York,  and  from  the  tabulation  made  by 
Professor  Larson  of  Columbia  University.  The  results  of  these  investiga- 
tions were  as  follows: 


Cost  Per         Cost  of        Cost  Per 
No.  of      No.  of       Cow,  Per         100  Lbs.         Qtof 
Source Herds       Cows  Year  of  Milk  Milk 

Delaware  Co..  N.  Y.. 174          5,308  $110.75  $1.55  $0.0335 

St  Lawrence  University,  N.  Y.          1               20  127.75  1.784  .0375 

Oneida  Co.,  N.  Y 42             751  111.26  2.167  .0466 

Cobleskill.  N.  Y 1            ....  116.64 

Prof.    Larson.   Columbia   Uni- 

versity,  N.  Y 127.75  1.784  .0375 

At  the  time  the  above  figures  were  compiled  the  cost  of  grain  was 
$32  per  ton,  hay  $18  per  ton,  silage  $5  per  ton,  labor  20c.  per  hour.  Most  of 
these  costs  have  advanced  from  50  to  100  per  cent  since  that  time. 

Regarding  the  amount  of  milk  produced  by  cows  in  the  State  of  New 
York,  the  Wicks  Committee  came  to  the  conclusion,  after  six  months' 
investigation,  that  "the  average  production  of  all  enumerated  dairy  cows 
of  the  State  of  New  York  approximated  4,000  to  4,500  pounds  of  milk  per 
annum."  The  cost  of  keeping  a  cow  does  not  increase  at  the  same  ratio  as 
the  quantity  of  milk  produced  increases.  For  example,  from  the  Wicks 
Committee  report  the  following  figures  are  taken : 

Cost  Per  Cow  Production 

$107.67  4,695  lbs. 

124.63  5,896  lbs. 

150.75  8.500  lbs. 

Concerning  the  prices  paid  to  the  producer,  the  report  of  the  Wicks 
Committee  says :  "  Up  until  the  month  of  October,  1916,  the  price  to  be  paid 
to  the  producer  was  largely  determined  and  controlled  by  the  price  which 
the  consumer  was  in  the  habit  of  paying    *     ♦     *    in  the  large  cities. 


I 


'i 


li 


11 


28 

In  other  words,  the  consumer  *  ♦  ♦  had  become  accustomed  to  pay 
a  certain  price  for  a  bottle  of  milk  in  the  same  way  that  he  became  accus- 
tomed to  the  payment  of  the  street  car  fares  *  *  *.  An  attempt  to 
increase  the  customary  price  was  followed  by  organized  resistance  *  *  *. 
The  result  was  that  in  determining  what  price  should  be  paid  to  the  dairymen 
no  heed  at  all  was  paid  to  the  actual  factors  of  cost." 

As  to  the  necessity  for  high  prices  the  Wicks  Committee  report  says : 
"  The  demands  of  these  dairymen  were  based  upon  necessity.  The  general 
public  and  the  buyers  and  everyone  familiar  with  the  facts  by  that  time 
conceded  the  justice  of  the  demand.  Above  all,  their  demands  were 
reasonable. 

"  The  increased  price  proposed  by  the  dairymen  was  nearly  four  times 
the  average  profits  of  the  previous  year  (of  the  distributors).  To  pay  this 
increased  price  meant  necessarily  an  increase  in  the  price  to  the  con- 
sumer   ♦    ♦     ♦. 

"The  Committee  believe  that  up  to  this  time  the  State  has  entirely 
neglected  by  any  competent  officer  or  body  to  supervise,  control  or  aid  in  a 
situation  like  that  shown  to  exist. 

"The  State  has  made  it  dangerous  for  the  distributors  to  meet  the 
organized  dairymen  upon  common  ground    *     *     ♦." 

Cost  of  Production,  1916-1917. 

Concerning  the  cost  of  producing  milk  in  the  State  of  New  York  in 
the  year  1916,  the  Committee  received  testimony  from  the  officials  of  the 
Dairymen's  League  and  Prof.  G.  F.  Warren.  Mr.  Cooper,  the  President  of 
the  Dairymen's  League,  said :  "  The  cause  of  high  prices  is  that  the  price 
of  feed  is  rapidly  increasing  and  also  the  price  of  labor ;  ♦  ♦  *  our  most 
reliable  figures  are  obtained  from  the  College  of  Agriculture,  that  is  by  Prof. 
Warren. 

"  The  formula  contained  in  these  papers  (from  Prof.  Warren)  was  used 
as  a  basis  for  price  fixing  by  the  Board  of  Directors  of  the  Dairymen's 
League  and  representatives  from  the  different  branches.  The  general 
result  of  formula  is,  labor  3  hours,  grain  30  pounds,  hay  60  pounds,  silage 
1 10  pounds,  plus  29  per  cent,  and  a  credit  of  1 1  per  cent.  That  was  worked 
by  filling  in  the  blanks  in  the  formula  with  current  prices,  as  follows : 

S^*»"    $54.60perton 

|?fy 12.00perton 

Silage g.OOperton 

"  The  particular  price  arrived  at  by  the  Dairymen's  League  was  $2.97 
per  hundred  pounds.  This  was  multiplied  by  111.9  per  cent,  to  get  the  orice 
for  October."  ^ 

Prof.  Warren  stated  in  his  testimony  that  "the  standard  amount  of 
time  recognized  for  taking  care  of  one  dairy  cow  is  150  hours  per  year; 
*     ♦     *    it  takes  practically  one  pound  of  grain  for  three  pounds  of  milk." 


29 

Data  was  secured  from  herds  from  Broome  County,  N.  Y.,  of  56  farms 
keeping  798  cows.  These  were  farms  with  six  or  more  cows,  not  selected. 
For  the  year  ending  May  1,  1915,  these  herds  produced  milk  by  months 
approximately  as  it  was  needed  in  New  York  City,  as  follows: 

New  York       Broome  County 
Date City  Supply  Herds 

May,  June  and  July 26.7%  27.1% 

Six  months  beginning  October  1st. 47.8%  51.4% 

The  formula  from  a  study  of  these  Broome  County  herds  is  as  follows : 

To  Produce  100  Pounds  of  Milk. 

Cost  Items  Amount 

Grain   26.6    lbs. 

Silage  96.1    lbs. 

Green   feed    14.7    lbs. 

Dry  forage  , 73.3    lbs. 

Labor   3.38  hours 

"  The  prices  of  milk,  figured  on  that  formula,  will  come  within  5  per  cent 
of  the  price  of  milk  based  on  all  information  available  in  the  market ;  *  *  ♦ 
this  price  is  based  on  the  average  cow.  The  butterfat  for  Broome  County 
was  4  per  cent." 

Figures  obtained  from  21  New  York  farms  keeping  386  cows  in  larger 

herds  than  the  average,  used  to  produce  100  pounds  of  milk,  the  following: 

Cost  Items  Amount 

Grain   29. 1     lbs. 

Silage— green  food  109.4    lbs. 

Hay  49.4    lbs. 

Labor  2.37  hours 

"  The  cows  average  6,446.9  pounds  per  year.  The  above  costs  amounted 
to  8L3  per  cent ;  the  butter  fat  was  3.5." 

Professor  Warren  gave  his  own  summary  of  the  data  received  from 
Prof.  Frank  App,  of  New  Jersey,  from  the  Connecticut  Agricultural  Experi- 
ment Station,  Bulletin  published  in  July,  1917,  from  the  Massachusetts  Agri- 
cultural College  for  sixteen  years,  from  the  Connecticut  Agricultural  Col- 
lege for  five  years,  and  from  the  New  Jersey  Agricultural  Experiment 
Station. 

The  average  of  all  these  figures  is  stated  by  Professor  Warren  in  a 
formula  which  is  as  follows : 

Production  per  cow,  6,197.8  pounds  of  milk.  To  produce  100  pounds  of 
milk  it  requires. 

Grain    .• 33.1    lbs. 

Silage    97.2    lbs. 

Hay    61        lbs. 

Labor   2.83  hours 

The  above  costs  equal  to  83.8  per  cent  of  the  total. 

The  Professor  stated  that  experiment  stations  are  feeding  a  little  on 
the  side  of  diminishing  returns,  that  is,  they  are  overfeeding,  while  the 
farmers  are  getting  more  returns  for  feeding. 


V 


I 


%■ 


30 

Professor  Warren  submitted  an  exhibit  showing  the  average  investiga- 
tions published  by  Michigan,  Connecticut  and  New  York  State  Agricultural 
Colleges  as  a  result  of  cost  accounts  compiled  from  six  separate  investiga- 
tions. From  these  he  derived  the  formula  of  cost  items  in  the  production 
of  100  pounds  of  milk  as  follows : 

Grain    34.7    lbs. 

Hay    51.8    lbs. 

Silage  105.9    lbs. 

Labor   2.59  hrs. 

He  assumed  that  the  cost  of  these  items  was :  labor  25c.  per  hour,  grain 
$55  per  ton,  silage  $6  per  ton,  and  hay  $15  per  ton.  This  would  make  the 
average  cost  of  100  pounds  of  milk  $2.94. 

If  the  figures  for  New  Tersev  are  substituted  for  Michigan  in  this 
formula  it  makes  the  average  cost  $2.83  per  100  pounds.  This_is  15c.  i^er 
J 00  pounds  below  the  cost  of  producing  milk  in  the  winter  dairies  of 
Broome  Cotinty,  New  York. 

Professor  Warren  summarized  the  testimony  by  saying: 

"  The  Broome  County  figures  alone  to  my  mind  are  the  best 
figures  upon  which  to  base  conclusions." 

Concerning  the  price  of  labor,  Professor  Warren  states : 

"  The  price  of  labor  of  30c.  an  hour  cannot  possibly  be  used  in 
this  formula.  If  they  (the  Dairymen's  League)  used  30c.  an  hour 
(in  arriving  at  their  cost  price)  the  price  would  have  been  higher 
than  they  get.  We  assume  that  (in  the  month  of  October,  1917),  the 
cost  of  grain  is  $55  per  ton,  silage  $6  and  hay  $15  and  labor  25c. 
an  hour. 

"  Under  these  conditions  the  cost  of  producing  milk  at  the  present 
time  (October,  1917)  would  be  73.3  per  cent  more  than  was  received 
for  milk  in  the  years  1914  and  1915.  You  would  arrive  at  a  figure 
of  $3.43  for  4  per  cent  milk  this  year.  This  formula  (for  Broome 
County,  New  York)  represents  a  reasonable  degree  of  good  business 
management.  The  farmers  are  better  than  the  average.  The  con- 
sumer would  not  be  paying  the  cost  of  inefiiciency.  The  herds  are 
larger  than  the  average  and  labor  is  more  efficient.  If  farms  are 
well  managed  this  already  represents  the  application  of  that  efficiency 
you  wish  to  apply.  ♦  ♦  *  I  believe  that  25  per  cent  of  the  milk 
If  produced  for  New  York  City  is  produced  on  probably  as  efficient  a 
4|    basis  as  this. 

•  "  There  were  on  New  York  farms  in  April,  1916,  102,153  hired 

men.     In  April,  1917,  there  were  86,245  hired  men." 

Mr.  G.  W.  Bush,  one  of  the  statisticians  of  the  Dairymen's  League, 
testified  that  he  had  made  calculations  as  to  the  cost  of  milk,  using  Professor 
Warren's  figures  and  figures  gathered  from  other  sources.    As  the  result  of 


31 

these  calculations  he  had  come  to  the  conclusion  that  the  correct  formula 
for  the  production  of  100  pounds  of  milk  is : 

Grain    34.7    lbs. 

Hay    51 .8    lbs. 

Silage    105.9    lbs. 

Labor    2.59  hrs. 

These  mn^ttitntpH  7«  4  p^^  r^nt  "^  ^^^  ^^^^^  ^f'llt 

He  testified  that  the  proper  prices  for  these  items  for  the  month  of 
October,  1917,  were: 

Grain   $55  per  ton 

Hay    $12  per  ton 

Silage   $5  per  ton 

Labor  30c  per  hour 

This  amounts  to  $2.93  per  100  pounds  of  milk,  yielding  3.5  per  cent 

butter  fat. 

He  stated  that  it  costs  five  times  as  much  to  produce  milk  in  winter 
as  in  summer  and  that  if  the  yearly  average  cost  of  milk  is  $2.93  per  100 
pounds  the  price  for  October  should  be  $3.23  per  100  pounds. 

He  submitted  a  table  showing  the  increase  in  the  cost  of  grain  as 
follows : 

Increase  in  the  price  of  feed: 

—  -  "  ■  ■  ~-^ 

Feed  Oct..  1916      Nov.,  1916     Sept.,  1917 

Gluten                 $35.57  $41.45  $57.00 

Bran      31.07  33.70  38.00 

Dry  Grains' ;.'. '. 35.70  40.70  59.00 

Brewers'  Grains  28.95  33.95  49.00 

Cotton  Seed  Meal 42.95  46.45  55.00 

Corn  Meal  35.50  40.15  48.50 

Hominy  Meal  39.20  43.70  62.00 

Average  Prices    36.50  41.07  57.31 


Labor,  the  witness  stated,  could  be  obtained  in  1916  at  a  cost  of  20c.  per 
hour.  In  the  year  1917  this  cost  has  increased  about  50  per  cent  and  the 
scarcity  of  farm  labor  is  a  most  vital  worry. 

During  the  past  year  the  cost  of  cows  has  increased  at  least  25  per 
cent,  utensils  33  to  50  per  cent. 

In  the  summer  of  1917  Professor  Warren  sent  out  a  questionnaire  to 
1,646  dairies  owning  32,904  cows.  Between  April  and  August  they  sold 
1,836  cows.  Of  these  1,554  were  good  cows,  sold  because  of  scarcity  of 
labor,  high  cost  of  feed,  and  low  selling  price  of  milk. 

Mr.  Elbert  S.  Brigham,  Commissioner  of  Agriculture  of  the  State  of 
Vermont,  testified  that  the  list  of  cost  items  in  the  cost  of  producing  milk 
includes,  cow,  food,  labor,  buildings,  equipment,  miscellaneous,  managerial 
ability  and  business  risk. 

The  present  conditions  of  the  labor  market  are  such  that  25c.  an  hour 
certainly  is  a  conservative  figure  for  use  in  computing  labor  cost. 


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Managerial  ability  is  a  cost  item  that  must  be  recognized.  A  farmer 
who  successfully  conducts  a  dairy  enterprise  is  justly  entitled  to  something 
more  than  the  regular  wage,  otherwise  the  boss  stands  on  the  same  level 
as  the  hired  man. 

The  Federal  Farm  Management  Experts  of  the  United  States  Depart- 
ment of  Agriculture  state  that  10  per  cent  of  the  total  costs  of  conducting 
the  business  is  a  reasonable  charge  for  managerial  ability. 

The  total  costs  in  a  survey  of  Vermont  farms  was  for  caring  for  one 
cow  per  year  $123.74,  consequently  $12.37  is  the  proper  charge  to  be  allowed 
for  managerial  ability. 

Mr.  Brigham  submitted  the  following  statement  regarding  the  costs  of 
milk  production  in  Vermont: 

Summary  of  cost  of  milk  production,  May  1,  1916-April  30.  1917,  on 
212  Vermont  farms  located  in  12  counties. 

4,650  cows 5.328  lbs.  (2,478  qts.)  milk  per  cow 

Food  Cost 
Per  C/Ow 

Grain,  1,240  lbs.  at  $41.12  per  ton $2';  48 

Silage,  5,444  lbs.  at  $4.39. :. .'..*.'...'.'.'.'*.'.'"*      11  93 

Other  succulents,  400  lbs.  at  $4.00 n  an 

Hay,  3,500  lbs.  at  $11.94 '.'.  .*.*.*.*.*.'.* .'.■.' .;;;.*;.';  ■      20  93 

Other  dry  forage 0  51 

Pasturage  V^V^'.\\'.V.V^'^'.V.        6^95 

Total  food  cost ^^ 

Labor  Cost 

Man  labor,  158  hours  at  $0219 $34  53 

Horse  labor,  8  hours  at  $0.141 1.09 

Total  labor  cost  $35.62 

Overhead  Costs 

Interest  on  animal  inventory ^  44 

Bedding 1.'69 

Use  of  buildings 7.50 

Use  of  equipment  !!!*.]..!  1  !.*!!! !  1  12 

Bull  service  '..'.'.'.'...'.'.'.../.'.,'.  1  94 

Interest   on    feed    inventory 0.86 

Miscellaneous  costs 3^97 

Total  overhead  costs |21  52 

Managerial  ability,  business  risks 12 .  37 

Total  costs  $136.11 

Average  Returns  Per  Cow 
Increase  value  of  cows $7  28 

j!^^nure ;..*;::::.*:::::;:::  12:96 

Calves  3  52 

Hide.«  and  feed  bags 0.49 

Total  returns  for  items  other  than  milk $24.25 

Net  cost  of  milk  ($136.11— $24.25) %\\\  35 

Total  production,  2,478  quarts ..5,328  lbs. 


33 

After  stating  the  actual  costs  as  determined  on  Vermont  farms  from 
May  1,  1916,  to  April  30,  1917,  Mr.  Brigham  submitted  the  following  set 
of  figures  to  show  the  probable  cost  of  producing  milk  on  farms  in  October. 
1917: 

Outline  for  Computing  Cost  of  Milk  Production 
Probable  Cost  October  1,  1917. 

Food  Cost. 

Grain,  1,240  lbs.  at  $50.00 $31.00 

Silage,  5,440  lbs.  at  $5.00 13-60 

Other  succulents,  5,440  lbs •  •  •! 

Green  Oats,  etc.,  5,440  lbs "-^ 

Hay,  3,500  lbs.  at  $13.00 • 22.75 

Other  dry  forage  (corn  fodder,  straw,  etc.) "-^ 

Pasture    ' '^ 

Total  food  cost $76.10 

Labor  Cost. 

Man  Labor,  159  hrs.  at  25c $39.50 

Horse  Labor,  8  hrs.  at  18c I -^ 

Total  labor  cost 40.94 

Total  overhead  costs 1  c'Si 

Managerial  ability,   etc 15.01 

Total  cost   ; ^^JMJ 

Total  returns  other  than  milk 18.45 

Net  cost  of  milk ^^^'^ 

Milk  production,  quarts «n  nco? 

Cost  per  quart  at  farm $^*S^?c 

Cost  per  100  lbs.  at  farm 2.75 

Prof.  W.  P.  B.  Lockwood,  of  Massachusetts  Agricultural  College, 
Amherst,  Mass,  presented  a  summary  of  figures  obtained  from  87  farms 
from  May  1,  1916,  to  April  30,  1917,  in  the  State  of  Massachusetts. 

Cows  averaged  6,760  pounds  of  milk  per  year.  The  census  figures  show 
that  for  the  State  of  Massachusetts  the  average  is  4,700  pounds  per  year. 
The  total  cost  per  cow  in  the  87  herds  was  $201.36.  Subtracting  credits  left 
$168.45,  and  adding  10  per  cent  for  managerial  ability  makes  $185.31,  which 
is  equal  to  .0618  per  quart. 

A  second  set  of  figures  shows  the  cost  of  producing  milk  from  cows 
which  produced  only  5,005  pounds  of  milk  per  year  to  be  .0724  per  quart. 
Using  the  September,  1917,  prices  for  grain,  it  makes  the  cost  .0816  per 
quart. 

The  cost  of  labor  is  26.8c.  per  hour.  Where  the  percentage  of  farm 
receipts  for  milk  is  less  than  60  per  cent,  on  249  farms,  the  average  labor 
income  is  $714  per  year.  Where  the  receipts  for  milk  are  over  60  per  cent, 
on  135  farms,  the  average  labor  income  is  only  $383  per  year.  In  other 
words,  the  less  the  dairyman  depends  on  milk  for  his  income,  the  greater 
are  the  returns  for  his  labor. 


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34 

Tabulations  presented  by  Professor  Lock  wood  are  as  follows : 

Cost  Last  Year — Average  Massachusetts  Cow 
(Based  on  the  group  of  records  representing  the  average  cow  in  Massa- 
chusetts showing  cost  for  the  year  May  1,  1916,  to  April  30,  1917.    Figures 
from  17  herds,  323  cows,  having  an  average  production  of  5,005  pounds  of 
milk  per  cow.) 


Items  of  Cost. 


Quantity. 


Price 
Per  Ton. 


Peed — 

Grain   2,430  lbs. 

Hay    2,661  lbs. 

Salt  Hay  718  lbs. 

Feed — 

Corn  Stover  478  lbs. 

Silage    4,098  lbs. 

Green   Feed    1,408  lbs. 

Pasture    


$37.69 
16.63 
10.00 

$7.65 
5.15 
3.96 


Total  feed  costs. 


Labor — 
Man  hours   . 
Horse  hours 


150  hrs. 
9  hrs. 


(Per  hr.) 
$0,268 
.207 


Total  labor  costs 

Other  Costs — 

Depreciation  on  cows 

Interest  on  cows  

Taxes  and  insurance  

Veterinary  services,  drugs  and  disinfectants 

Bull  service  

Use  of  buildings  and  water  

Bedding    

Use  of  equipment 

Ice    

Miscellaneous  other  


Total  other  costs. 


Total  all  costs. 

Credits — 

Manure    

Calves    

Milk  used  on  farm... 


8.1  Ton 
.85  Calf 
152  Quarts 


$2.05 
6.34 
.0494 


Total  Credits 


Net  Cost  per  cow , 

Managerial  ability,  business  risk,  and  dairy  overhead,  10%. 

Net  costs — 

Final  costs,  2,175  qts.  milk 

Cost  per  quart  wholesale  milk. 

Receipts  per  cow 

Receipts  per  quart 

Loss  per  cow 

Loss  per  quart 


Total. 


$45.79 

30.44 

3.59 

$1.83 

10.55 

2.78 

5.47 

$100.45 


$40.20 
1.86 

$42.06 

$6.91 
4.90 
1.53 
.83 
3.40 
6.82 
1.01 
1.67 
1.23 
1.^31 

$29.61 

$172.62 

$16.60 
5.39 
7.51 

$29.50 

$142.62 
14.31 


156.93 

.0724 
112.28 

.0516 
45.15 

.0205 


Total  miscellaneous  for  the  323  cows  was  as  follows — Electricity  for  motors,  $125 ; 
artificial  light,  $71;  salt  and  stock  feed,  ^Z\  paid  for  hauling  milk,  $60;  testincr.  $55; 
association  fees  and  dues,  $29;  fly  spray,  $5,  and  changing  stock,  $5.    Total,  $423. 


Cost  of  producing  a  quart  of  milk  with  the  average  Massachusetts 
cow  was  .0724. 

In  general  the  dairyman  is  efficient  If  he  was  not  so  and  there  were 
large  profits  to  be  made  in  the  milk  business,  capital  from  outside  sources 
would  be  coming  into  the  dairy  business.  There  is  no  rush  of  capital  to  the 
dairy  business  taking  place  at  present,  notwithstanding  the  fact  that  we  must 
have  milk  and  dairy  products. 

Professor  Lockwood  presented  a  second  tabulation  of  costs  using  the 
prices  for  October,  as  follows : 

Cost  per  Cow. 


Items  of  Cost. 


Quantity. 


Price 
Per  Ton. 


Total. 


Feed — 

Grain    

Hay    

Salt  Hay  

Corn  Stover   

Silage    

Green  feed  and  other  succulents. 
Pasture    


2,430  lbs. 
3,661  lbs. 

718  lbs. 

478  lbs. 
4,098  lbs. 
1,408  lbs. 


$56.00 

$68.04 

16.69 

30.55 

10.00 

3.59 

7.65 

1.83 

6.00 

12.29 

4.50 

3.17 

5.47 

Total   feed  costs. 


Labor — 
Man  hours  . . 
Horse    hours. 


150  hours 
9  hours 


(Per  hr.) 
$0,275 
.20 


Total  labor  costs. 


Other  Costs— 

Depreciation  on  cows 

Interest  on  cows 

Taxes  and  insurance  

Veterinary  services,  drugs  and  disinfectants 

Bull  service  

Use  of  buildings  and  water 

Bedding    

Use  of  equipment  

Ice   

Miscellaneous    


Total  other  costs. 
Total  all  costs  .. 


$124.94 


$41.25 
1.80 

$43.05 


$6.91 
4.90 
1.53 
.83 
3.40 
6.82 
1.01 
1.67 
1.23 
1.31 

$29.61 
197.60 


Credits — 

Manure 

Calves    

Milk  used  on  farm. 


8. 1  Tons 

.85  Calf 

152  Quarts 


$2.50 

$20.25 

6.34 

5.39 

.07 

10.64 

Total  credits 


$36.28 


Net  cost  per  cow $161 .32 

Managerial  ability,  business  risk  and  dairy  overhead,  10%  net  cost 16.13 


Final  cost  per  cow,  2,175  quarts $177.45 

Cost  in  September,  1917,  for  producing  milk  in  Massachusetts  is  .0816. 


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16 

Professor  Lockwood  also  presented  a  set  of  figures  showing  how  the 
cost  of  milk  varies  with  the  quantity  produced  per  cow. 

Cost  of  milk  with  varying  production.  Cows  vary  from  5,105  pounds 
to  7,500  pounds  per  year. 

Cost  of  Milk  With  Varying  Production, 

(Cost  Per  Cow.) 

Number  of  farms 17  52  18 

Number  of  cows 323  901 . 5  353 

Production  Per  Cow. 
Item  of  Cost.  Less  5,501  lbs.  5,501-7,500  Over  7,500  lbs. 

^^feain    $45.79  $50.81  $52.44 

Dry  roughage 35.86  33.08  39.02 

Succulent  roughage  13.33  18.98  22.89 

Pasture    ....T. 5.47  6.25  5.76 

$100.45         $109.12         $120.11 

Labor — 

Man  Labor: 

Hours    150  188  241 

Cost    $40.20  $47.20  $64.44 

Horse  labor  1.86  3.21  5.54 

Total  labor  costs $42.06  $50.41  $69.98 

Total  other  costs 29.61  36.30  52.11 

Total  all  costs 172.12  195.83  242.20, 

Total  credits   29.50  29.59  44.44 

Net  cost  (cost  minus  credits) 142.62  166.24  197.76 

Managerial  ability,  etc.,  10  per  cent,  of  net  cost  14.26  16.62  19.78 

Final  cost  per  cow 156.88  182.86  217.54 

Wholesale  milk  sold,  quarts 2,175  2,928  3,935 

Cost  per  quart 0721  .0624  .0552 

Prof.  John  M.  Fuller,  Professor  of  Dairying  in  New  Hampshire  Agri- 
cultural College,  Durham,  N.  H.,  presented  figures  obtained  from  200  farms 
in  the  cow-testing  associations  of  New  Hampshire,  in  which  there  were  2,597 
cows ;  also  reports  from  100  farms  in  four  other  associations  and  additional 
data  from  37  representative  dairymen  in  the  state. 

The  average  production  of  cows  on  the  200  farms  is  5,944  lbs.  per  cow 
per  year.  The  cost  of  producing  milk  on  the  prices  of  feed  in  the  month  of 
June,  1917,  was  as  follows : 

Grain,  .77  tons  at  $55.64  per  ton ^$SJ 

Silage,  1.75  tons  at  $5  per  ton 8.75 

Green  feed,  .27  tons  at  $4.50  per  ton LS 

Pasture,  June  1st  to  October  1st 6.00 

Hay,  1.65  tons  at  $13.19 21.17 

Labor,  205  hours  at  23  cents  an  hour 47.15 

Delivery,  330  times • ; •  •  • 8.25 

Interest  on  investment  plus  insurance  at  1  per  cent,  plus  repairs  and  depre- 
ciation at  3  per  cent. 

Housing  (5  per  cent,  on  $1,250) 5.63 

Bedding  J.OO 

Depreciation   (cows)    ^ |'75 

Taxes  and  insurance  (cows) 5.05 


37 


Bull,  feed  and  expenses 

Ice,  coal  and  wood 

Veterinary  service  

Tools  and  utensils 

Cow  Testing  Association  expense. 


4.35 

2.20 

.87 

.53 

1.50 


Total  , $168.86 


Credits — 

13  tons  manure. 

1  calf  

Feed  bags  


$20.00 

5.00 

.40 


Total  credits 


$25.40 


Net  cost  for  keeping  one  cow  one  year $143.45 

Production  per  cow,  2,764  quarts ;  cost  per  quart,  5.19  cents  for  milk  averaging  3.5  per 
cent,  butter  fat. 

If  these  costs  were  applied  to  the  average  cow  in  New  Hampshire  pro- 
ducing 2,145  quarts  of  milk  per  year,  the  cost  of  production  would  be  6.6 
cents  per  quart. 

Labor  costs  $45.(X)  per  month,  plus  bed  and  room.  This  makes  a  total 
not  far  from  $65.00  per  month.  In  the  Southern  half  of  New  Hampshire 
the  cost  of  production  per  cow  is  $115.35  per  year.  In  the  Northern  half 
it  is  only  $106.00  per  year.  This  is  due  to  the  fact  that  in  the  Northern 
part  of  New  Hampshire  they  have  excellent  pasture  and  can  raise  more 
silage. 

Prof.  Frank  App,  New  Jersey  Agricultural  College,  New  Brunswick, 

N.  J.,  presented  data  collected  by  him  from  160  farms  and  3,866  cows  for 

the  year  ending  May  14,  1914.    The  dairy  farms  were  located  in  Sussex 

County,  N.  J.    The  result  of  this  investigation  is  given  in  the  following 

tabulation : 

Year  ending  May  14,  1914 

Number  of  farms 160 

Number  of  cows 3,866 

Pounds  of  milk  per  cow 6,491 

Pounds  of  butter  fat  per  cow 207.7 

Per  cent,  of  milk  produced  in  six  months  beginning  October  1 47.6% 


Costs. 


Amount  Per  Cow.   Value  Per  Cow. 


Grain 
Hay    . 
Other 
Silage 
Other 


dry   forage. 


succulent  feed. 


2,577  lbs. 

3,167  lbs. 

665  lbs. 

2,076  lbs. 

0  lbs. 


182.6  hours 
20.1  hours 


Pasture    120  to  150  days 

Bedding     0 

Human  labor    

Horse  labor  

Use  of  buildings 

Use  of  equipment x 

Interest  on  cows Value  of  cow  $82 

Depreciation  on  cows,  8  per  cent x 

Bull  service  x 

Miscellaneous    x 


$38.66 

23.75 

2.59 

5.19 

0 

8.00 

0 

27.03 

3.55 

8.19 

.45 

4.10 

6.56 

2.40 

2.30 


Total  cost 


$132.57 


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Returns  other  than  milk—  Amount  Per  Cow.  Value  Per  Cow. 

Calves  and  calf  hides x  $6.53 

Manure  recovered   x  10.00 

Feed  bags  x  0 

Total  returns  other  than  milk x  $16.53 

'.Net  cost  of  milk 116.04 

Butter  fat,  cow  testing  assoc,  average  3.2  per  cent. 

;  George  C.  White,  Professor  of  Dairy  Husbandry,  Connecticut  Agri- 
cultural College,  Storrs,  Conn.,  furnished  data  from  a  survey  made  of 
178  farms  in  the  State  of  Connecticut.  In  this  survey  there  was  used  a 
schedule  of  cost  items  originated  in  Massachusetts  which  had  later  on  been 
accepted  by  the  Federal  authorities.  This  survey  was  made  the  first  part  of 
Jtme,  1917,  and  the  cost  figures  cover  the  period  from  May  1,  1916,  to  April 
30,  1917.  The  greater  part  of  these  farms  had  records  for  the  amount 
expended  for  dairy  charges.  The  minimum  number  of  dairy  cows  per  herd 
was  7,  the  average  ntunber  of  cows  was  about  18 J^.  The  results  are 
given  in  a  bulletin  dated  November  1,  1917.  In  this  report  the  num- 
ber of  cows  was  3,258,  producing  at  an  average  of  6,009  lbs.  of  milk  per 
year.  This  is  higher  than  the  state  average  of  5,500  lbs.  One  and  one-half 
per  cent  of  the  cows  died  during  the  year  and  others  were  sold  for  beef.  This 
amounts  to  an  average  decrease  of  5.98.  Interest  on  investment  per  cow  at  6 
per  cent  was  $6.53.  The  cost  for  grain  is  taken  at  the  actual  cost  paid  by  the 
farmers.  He  figures  the  cost  at  $40.22  per  ton,  the  average  consumption  1.05 
tons,  green  feed  4.10  tons  at  $20.87;  silage,  7,380  lbs.,  at  $5.00  per  ton, 
$19.02;  other  green  feed,  820  lbs.,  at  $4.50  per  ton,  $1.85;  dry  forage, 
1.94  tons,  $29.37;  hay,  $15.00  per  ton  plus  other  forage;  pasture,  $7.17; 
bedding,  $1.63. 

In  one  tabulation  is  shown  the  cost  per  quart  for  the  month  of  April, 
which  was  .0629 ;  another  tabulation  shows  the  cost  per  quart  in  herds  vary- 
ing in  the  production  of  milk  as  follows : 

Milk  Production.  Cost  Per  Quart 

4,500  lbs.  or  less 0672 

4,501-5,500  lbs 0594 

5,501-6,500  lbs 0562 

6,501-7,500  lbs 0542 

7,500  and  over 0466 

These  figures  differ  slightly  from  those  recalculated  by  the  Committee 
from  Professor  White's  data  and  used  elsewhere  in  this  report. 

Special  investigations  were  carried  on  by  auditors  from  the  office  of 
the  Commissioner  of  Accounts  on  a  number  of  private  farms. 

Farm  No.  1,  in  Northern  New  Jersey,  showed  cost  items  from  Novem- 
ber 1,  1916,  to  November  1,  1917,  as  follows: 


m 

Cost  of  Milk  Production — Dairy  Farm  in  Northern  New  Jersey — From 

Information  Given  Verbally  by  Owner. 
Herd  of  19  Cows. 

Total  for  Year, 

Nov.  1. 1916,  to  Average 

Nov.  1, 1917.  Per  Cow. 

1.  Feed  for  Cows — 

la.    Grain $666.90  $35.10 

lb.    Hay   466.67  24.562 

Ic.    Silage  297.18  15.64 

Id.    Pasturage 123.57  6.504 

2.  Labor  on  Cows — 

2a.    Milking 367.34  19.334 

2b.    Cleaning  Cow  Barn  87.16  4.587 

2c.    Hauling  Milk  (Man  and  Horse  Labor).  325.50  17.132 

3.  Supplies  and  Materials — 

3a.    Bedding  70.00  3.684 

3b.    Small  Repairs  50.00  2.632 

4.  Overhead  Charges — 

4a.  Interest  on  Plant  and  Equipment 127.98  6.736 

4b.  Depreciation  on  Plant  and  Equipment..  63.30  3.301 

4c.  Interest  on  Value  of  Cattle 108. 30  5 . 70 

4d.  Taxes  on  Plant,  Equipment  and  Cattle.  48.60  2.558 

4e.  Depreciation  on  Cows 95.00  5.000 

4f.  Bull  Service  58.50  3.08 

4g.  Supervision 250.00  13.158 

Total  Gross  Cost     $3,206.00       $168,706 

5.  Offsetting  Accounts — 

Manure,   calf,   etc 338.02 

Net  Cost    $2,867.98 


Net  Cost  of  Milk  Production,  $2,867.98. 

Milk  Sold.  Used.  Total  Production. 

113,831  lbs.  =  52,931  qts.  3,883  lbs.  =  1,805  qts.  117,714  lbs.  =  54,736  qts. 

$2,867.98  -7- 117,714  =  $2,436  per  cwt.  =  net  cost  of  production. 
$2,867.98  -f-  54,736  =  $0.0524  per  qt.  =  net  cost  of  production. 
$2,977.87 -f- 113,831  =^.616  per  cwt.  =  Aver,  sale  price  per  year. 
$2,977.87-;-  52,931  =  $0.0562  per  qt.  =  Aver.  sale  price  for  year. 

Farm  No.  2  showed  cost  items  for  producing  milk  for  the  period  from  November 
1,  1916,  to  November  1,  1917,  as  per  the  following  schedule: 

Cost  of  Milk  Production — Dairy  Farm  in  Northern  New  Jersey — From 

Information  Given  Verbally  by  Owner. 

Herd  of  47  Cows. 

Total  for  Year, 

Nov.  1. 1916,  to                   Average 
Nov.  1, 1917. Per  Cow. 

1.    Feed  for  Cows — 

la.    Grain    $4,720.96  $100,446 

lb.    Hay   1,133.17  24.11 

Ic.    Silage    339.34  7.22 

Id.    Pasturage    290.74  6.186 


•  • 


40 


41 


fHHI 


4illii 


ill  III 


tut 


iniiiflfi 


Total  for  Year, 

Nov.  1. 1916,  to  Average 

Nov.  1, 1917. Per  Cow. 

2.  Labor  on  Cows — 

2a.  Milking  555.10  11.81 

2b.  Oeaning  Cow  Bam   100.57  2.14 

2c.  Feeding  Cows  100.57  2.14 

2d.  Hauling  Milk 375.50  7.99 

2e.  Veterinarian  Service  9.50  .202 

3.  Supplies  and  Materials — 

3a.    Ice  50.00  1.064 

3b.    Bedding   52.56  1.118 

3c.    Small  Repairs  25.00  .532 

4.  Overhead  Charges — 

4a.  Interest  on  Plant  and  Equipment......  603.69  12.844 

4b.  Depreciation  on  Plant  and  Equipment..  186.87  3.916 

4c.  Interest  on  Value  of  Cattle 282.00  6.000 

4d.  Taxes  on  Plant,  Equipment  and  Cattle.  148.46  3.159 

4e.  Depreciation  on  Cows   235 .00  5.000 

4f.  BuU  Service 188.91  4.02 

4g.  Supervision   200.00  4.255 

Total  Gross  Cost  $9,597.94       $204,152 

5.  Offsetting  Accounts — 

Calves  $100.00 

6.  Manure   574.00 

674.00 

Net  Cost $8,923.94 

Net  Cost  of  Milk  ProducHon,  $8,923.94. 

Milk  Sold.  Used.  Total  Production. 

304,753  lbs.  =  141,710  qts.  3,833  lbs.  =•  1,805  qts.  308,636  lbs.  =  143,515  qts. 

$8,923.94 -7-308,636  =  $2,891  per  cwt.  =  net  cost  of  production. 
$8,923.94  -r- 143,515  =  $0.0622  per  qt.  =  net  cost  of  production. 
$7,850.60  ^  304,753  =  $2,576  per  cwt.  =  Average  sale  price  for  year. 
$7,850.60 -f- 141,710  =  $0.0554  per  qt.  =  Average  sale  price  for  year. 

Loss  per  qt.  of  milk  sold  $0.0066  under  assumption  made  as  to  compensation  of 
owner  and  family,  etc. 

Professor  R.  A.  Pearson,  President  of  the  College  of  Agriculture  of 
the  University  of  Iowa,  presents  published  data  secured  from  cost-account- 
ing restilts  in  the  Chicago  milk  district,  representing  approximately  1,000 
cows,  and  states  that  the  amount  of  feed,  forage  and  labor  entering  into  the 
cost  of  producing  100  lbs.  of  milk  is : 

Grain    44    lbs. 

Silage    188    lbs. 

Hay    50    lbs. 

Bedding  39    lbs. 

Man  hours    2.42  hrs. 

He  estimates  that  the  costs  are: 

Grain  $55  per  ton 

Hay  $10  per  ton 

Silage  $6  per  ton 

Bedding    $6  per  ton 

Man  hours    25c  per  hour 

These  figures  give  the  average  yearly  costs  per  one  hundred-weight  of 
$2.75.    Prof.  Pearson  estimates  that  the  cost  in  the  month  of  October  is 


109.2  per  cent  of  the  average  cost,  which  would  make  the  cost  for  the 
month  of  October,  1917,  $3.00  per  one  hundred-weight. 

Professor  Oscar  Erf,  of  the  University  of  Ohio,  Coliunbus,  Ohio,  pub- 
lished recently  a  statement  of  the  cost  of  keeping  a  cow  for  one  year  in  a 
well  managed  herd.    The  items  are  as  follows : 

Feed — 

Concentrates— 2,140  lbs.  at  $46  per  ton $49.22 

» 

Dry  Roughage — 

Hay— 3,800  lbs.  at  $12  per  ton 22.80 

Stover— 370  lbs.  at  $6  per  ton l.U 

Succulent  Feed — 

Silage— 6,950  lbs.  at  $6.50  per  ton 22.60 

Pasture — 

4  months  at  $3  per  month 12.00 

Total   $107.73 

Labor- 
Including  feeding,  milking,  driving  cows,  cleaning  stables,  clean- 
ing and  spraying  cows,  127  hours  at  18c 22.86 

Handling  Milk — 

Carrying,  cooling,  etc.,  27  hours  at  18c 4.86 

Hauling  Milk — 

28  hours  at  18c 5.04 

Managerial  Labor — 

Buying  and  selling  cows,  buying^  and  hauling  feeds,  equipment, 
attending  sick  cows,  marketing  milk,  dairy  meetings,  dairy 
papers,  36^  hours  at  18c 6.57  j 

Horse  Labor — 

30  hours  at  15c 4.50 

Total  Labor  Cost $43.83 

Other  Costs —  [ 

Depreciation  on   cows    $8.00 

Interest  on  cows  6.00 

Taxes 1 .  40 

Injury  risk   1 .60 

Veterinary  services    3 .48 

Tuberculin  tests    2.00 

Mortality 1.90 

Calf  loss  2.10 

Total    $26.48 

Buildings  and  Equipment — 

Interest  on  barn  3.00 

Interest  on  fences   1.60 

Interest  on  milk  house .72 

Interest  on  machinery   1 .20 


I  .1 


I 


m 


J, 


•Itlilll 


42 

Buildings  and  Equipment  {Contd.) — 

Interest  on  ice  house .67 

Interest  on  yard  for  cows 2.A0 

.    Taxes  and  insurance  1 .44 

Depreciation  on  barn   1  [io 

Depreciation  on  fence  1 .80 

Depreciation  on  milk  house .60 

Depreciation  on  ice  house .18 

Depreciation  on  machinery  3.2O 

Total    $18.01 

Total    $196.05 

These  figures  are  based  on  last  year's  prices  for  feed  and  labor.  The 
average  cow  under  these  conditions  would  produce  5,500  lbs.  From  this 
cost  must  be  subtracted  the  credits  amoimting  to  $27.00,  making  the  net 
cost  $169.05  per  cow,  which  figures  $3.07  per  100  lbs.  of  milk. 

Concerning  these  figures.  Professor  Erf,  however,  says  that  these  indi- 
cate the  cost  under  sanitary  conditions. 

He  submits  in  addition,  another  set  of  figures  to  show  how  cheaply 
milk  can  be  produced  in  an  ordinary  dairy  and  finds  that  at  the  same  prices 
for  feed  and  labor,  the  cost  would  be  only  $91.70  per  year  to  produce 
4,000  lbs.  of  milk  or  $2.29  per  one  hundred-weight. 

Bulletin  No.  501  of  the  U.  S.  Department  of  Agriculture  contains  a 
study  on  the  cost  of  producing  milk  on  four  dairy  farms  located  in  Wis- 
consin, Michigan,  Pennsylvania  and  North  Carolina.  This  shows  the 
proportion  of  cost  items  on  these  four  farms  as  follows: 


Location 


Feed 


Labor       Other  Costs 


Wisconsin   

Michigan 

Pennsylvania  .. 
North  Carolina 

3X±= 


48.5% 
57.2% 
52.1% 
53.2% 


31.7% 
25.6% 
24.0% 
22.8% 


19.8% 
17.2% 
23.9% 
24.0% 


Farm 

Wisconsin    

Michigan    

Pennsylvania 

North  Carolina  .. 


Cost 
per  Cow 


Milk 
per  Cow 


Cost  per        Cost  per 
100  lbs.  Quart 


$79.86 

105.12 

90.85 

110.95 


5,240  lb. 
6,536  lb. 
5,058  lb. 
5,142  lb. 


$1.52 
1.61 
1.80 
2.16 


$0.0328 
.0346 
.0387 
.0464 


Prices  of  feed  and  labor  are  based  on  prices  of  1912;  grain  at  $25  per 
ton  and  labor  at  not  more  than  14c.  per  hour. 


43- 

Cost  of  Producing  Milk  on  the  Sheffield  Experimental  Farm  at 

hobart,  n.  y. 

For  the  year  ending  October  31,  1917. 

A  most  careful  and  detailed  study  of  the  cost  items  connected  with  the 
operation  of  this  dairy  farm  was  made  by  auditors  from  the  office  of  the 
Commissioner  of  Accounts,  New  York  City.  The  farm  is  located  just 
west  of  the  Catskill  Mountains  in  the  town  of  Harpersfield.  It  consists 
of  512  acres  located  on  a  hillside  with  a  level  stretch  along  the  river  bottom. 
The  acreage  is  divided  as  follows : 

Tillable  land   214^  acres  41.9% 

Natural  pasture   268J4  acres  52.4% 

Woodland   25  acres  4.9% 

Meadows,  not  tillable 4  acres  0.8% 

512     acres 
Buildings  are  valued  as  follows : 


Present  Value 


Cost  to 
Rebuild 


Main  Cow  Barn  and  Extension $12,000.00 

Upper  Cow   Barn 3,000.00 

Third  Cow  Barn 1,500.00 

Carriage  House  and  Stable 2,500.00 

Main  Dwelling  1,500.00 

"Graham"  House  2,000.00 

«  Teyo  "  House 1,000.00 

"Jones"  House   1,000.00 

Piggeries  500. 00 

Tool  House  500.00 


$12,000.00 
3.500.00 
2,000.00 
3,000.00 
2,000.00 
2,000.00 
1,000.00 
2,000.00 
500.00 
500.00 


The  farm  activities  are  divided  between  five  different  enterprises.  The 
farming  activity  is  carried  on  almost  entirely  for  the  production  of  stock 
feed.  Under  contracting  is  included  the  operation  of  the  stone  crusher, 
the  hauling  of  stone,  ice,  milk  and  cream.  The  dairy  was  operated  for  a 
number  of  years  at  a  loss,  but  at  the  present  time,  under  a  competent  super- 
intendent, is  a  distinct  financial  success. 

The  auditors  were  able  to  separate  the  cost  of  labor  and  other  cost 
items  of  all  five  of  the  different  enterprises  conducted  on  this  farm,  so  that 
the  cost  of  producing  milk  could  be  separately  stated.  These  costs  appear 
in  the  following  tabulation: 

Hohart  Farms — Statement  of  Milk-Producing  Costs  and  Income,   Year 

Ended  October  31,  1917. 

Costs — 

Forage $10,962.08 

Labor  6,790.46 

Supplies,  Materials  and  Repairs 1,339.97 


il  r. 


ill 


Costs  (Con/d.)— 

Y^^^rest   2,192.01 

Insurance    9357 

1  axes j^  22 

Depreciation    !!!!!!.!!!!!!!!.!!!!..!  831  80 

Bull  Service  !!.......!.....!......!!.*.*  72.70 

Total    $22,481.81 

Credits — 

Manure    t2 124  38 

Miscellaneous '...'....'......... . .'  731 .38 

Net  Cost  (367.425.7  Milk-Quirts) ^fill'ls 

Cost  per  Milk-Quart,  .0534. 
Income  from  Milk  and  Cream $21,650. 17 

Profit  on  367,425.7  Milk-Quarts  (123.6  Cows) $2,024.12 

Profit  per  Milk-Quart,  .0055.  === 

Profit  per  Cow,  $16.3764. 

From  the  above  it  appears  that  on  milk  alone  produced  on  this  farm 
there  was  a  profit  of  $2,024.12. 

The  statistics  of  the  dairy  and  of  the  cost  items  connected  with  the  pro- 
duction at  Hobart  appear  in  the  following  tabulation : 

Cost  of  Milk  Production,  Sheffield  Experimental  Farm,  Hobart,  N.  Y. 

No.  of  cows  covered 123.6 

Period  covered 1  yr. 

Average  quarts  of  milk  per  cow  per  year 2972.7 

Average  lbs.  of  milk  per  cow  per  year 6317! 

Amount  of  Grain 189.6  tons 

Pounds  per  cow  per  year .....'.'.  3068. 

Pounds  per  100  lbs.  of  milk 4S,6 

Pounds  per  quart l  03 

Cost  of   Grain $8,079138 

Pnce  per  ton  (2,000  lbs.) $42.52 

Per  cow  per  year 55  37 

Per  100  lbs.  of  milk I.03 

Per  quart  of  milk .022 

Amount  of   Ensilage 192.0  tons 

Pounds  per  cow  per  year 3106.7 

Pounds  per  100  lbs.  of  milk 49.2 

Pounds  per  quart  of  milk 1.05 

Cost  of  Ensilage $543.00 

Price  per  ton  (2,000  lbs.) $2.83 

Per  cow  per  year $4  39 

Per  100  lbs.  of  milk ^069 

Per  quart  of  milk .0015 

Amount  of   Hay 130.4  tons 

Pounds  per  cow  per  year 2110. 

Pounds  per  100  lbs.  of  milk 33.40 

Pounds  per  quart  of  milk 0  79 

Cost  of  Hay $1,956.60 

Pnce  per  ton  (2,000  lbs.) 15.00 

Per  cow  per  year IS  g3 

Per  100  lbs.  of  milk .256 

Per  quart  of  milk .0053 


45 

Amount  of  Other  Fodder 15.0  tons 

Pounds  per  cow  per  year 242. 

Pounds  per  100  lbs.  of  milk 3.83 

Per  quart  of  milk. .0814 

Cost  of  Other  Fodder $225.00 

Price  per  ton  (2,000  lbs.) $15.00 

Per  cow  per  year 1.82 

Per  100  lbs.  of  milk .029 

Per  quart  of  milk .00061 

Cost  of   Pasture $158.10 

Per  cow  per  year 1.28 

Per  100  lbs.  of  milk .02 

Per  quart  of  milk .00043 

Total  Cost  of  Feeding $10,962.08 

Per  cow  per  year ^-^ 

Per  100  lbs.  of  milk ^"^^o 

Per  quart  of  milk .0298 

Cost  of  Labor $6,790.46 

Per  cow  per  year ^•?i 

Per  100  lbs.  of  milk -^ 

Per  quart  of  milk .018 

Miscellaneous  Costs   $1,412  67 

Per  cow  per  year 11 .43 

Per  100  lbs.  of  milk -18 

Per  quart  of  milk .0038 

Overhead  Costs   $3,316.60 

Per  cow  per  year 26.83 

Per  100  lbs.  of  milk .42 

Per  quart  of  milk ^__       .0089 

Gross  Cost  $22,AS\M 

Per  cow  per  year ^°l-§2 

Per  100  lbs.  of  milk 2.87 

Per  quart  of  milk 061 

Credits    $2,855.76 

Per  cow  per  year 23. 10 

Per  100  lbs.  of  milk .36 

Per  quart  of  milk .0076 

Net  Costs    $19,626.05 

Per  cow  per  year 158.79 

Per  100  lbs.  of  milk 2.51 

Per  quart  of  milk 0534 

From  this  it  appears  that  the  cost  of  producing  100  pounds  of  milk 
for  the  year  ending  October  31,  1917,  was  ^.51,  making  the  cost  per  quart 
.0534. 


46 


'It 


1 


I  I 


illl 


A  condensed  statement  of  the  cost  of  milk  production  on  the  Hobart 
Farm  appears  in  the  following  list : 

Statement  of  Income  and  Profit  and  Loss — Hobart  Experimental  Farm — 

Year  Ended  October  31,  1917. 


Enterprises. 
jc 


Total. 

Income — 

(1)  Milk  and  Cream  $21,650.17 

(2)  Calves    161.00 

(3)  Pigs 2,126.79 

(4)  Produce    3,924.70 

(5)  Crushed  Stone  ..  282.70 

(6)  Hauling  on  Con- 

tract   526.50 

(7)  Manure   2724.22 

(8)  Miscellaneous   ..  2,169.13 

Total   Income..  $33,565.21 

Costs — 

(9)  Forage  $16,062.78 

(10)  Labor  8,553.95 

(11)  Plant     Supplies, 

Materials    and 

Repairs  2,492.64 

(12)  Pigs   376.00 

.(13)  Interest   2,974.87 

(14)  Insurance   120.55 

(15)  Taxes  259.49 

(16)  Depreciation   ...  1,194.05 

(17)  Miscellaneous  ..  663.47 

(18)  Bull  Service  ...  72.70 

(19)  Manure 1,833.34 

Total   $34,603.84 

Deduct — Increases  in  In- 
ventory — 

(20)  Forage    $3,086.52 

(21)  Young  Cattle  ...  546.00 

(22)  Young  Swine  ..  652.00 

(23)  Miscellaneous  ..  15.00 

$4,299.52 

$30,304.32 

Add — Decreases    in    In- 
vent ory — 

(24)  Forage   $1,441.50 

(25)  Miscellaneous  ..  130.36 

Total  $1,571.86 

Total  Costs  ...  $31,876.18 


Con- 
Milk  Calf  Pig  tract- 
Producing.    Raising.    Raising.    Farming,    ing. 


$21,650.17 


$161.00 


$2,126.79 


$3,924.70 


2,124.38 
731.38 


599.84 
14.93 


$282.70 
526.50 

19.86  V,39i.'ii    'ii;9i 


$24,505.93     ^S.77  $2,146.59  $5,315.81  $821.11 


$12,701.34  $1,274.65      $234.54  $1,852.25    

6,790.46         74.48        131.10     1,254.57  $303.34 


1,187.74         19.78 


2,192.01 

98.57 

194.22 

831.80 

50.15 

72.70 


18.17 
2.02 
1.87 

17.08 
8.72 


97.31 

376.00 

87.78 

2.75 

5.40 

15.17 

242.05 


1.140.72     47.09 


578.75 
11.56 
45.40 

269.80 
40.15 


98.16 

5.65 

12.60 

60.20 

322.40 


1,833.34    

$24,118.99 
$2,768.26 

$1,416.77 

$318.26 
546.00 

$1,192.10  $7,026.54  $849.44 

652  00 

10  00           5  00 

$2,768.26 

$864.26 
$552.51 

28.28 

$662.00         $5.00    

$21,350.73 

$1,029.00 
102.08 

$530.10  $7,021.54  $849.44 
$412.50    

$1,131.08 

$28.28 

$412.50    

$22,481.81      $580.79     $530.10  $7,434.04  $849.44 


Enterprises. 

Con- 
Milk  Calf  Pig  tract- 

Total.      Producing.    Raising.    Raising.    Farming,    ing. 

Net  Income  from  Opera- 
tion— 

Profits    $1,689.03    $2,024.12     $194.98  $1,616.49    

(Loss)     (Loss) 
Losses $2,118.23    $28.33 

Net   $1,689.03     $2,024.12     $194.98  $1,616.49  $2,118.23    $28.33 

Additions  to  Income — 
(26)  Profit  on  Mature 
Stock  Bought 
and  Sold  ....     $3,332.00    $3,018.60    $313.40    

Total  Profit  for  the  Pe-  (Loss)     (Loss) 

riod  $5,021.03     $5,042.72     $194.98  $1,929.89  $2,118.23    $28.33 

This  statement  is  based  on  best  data  available  at  the  Farm. 

Overhead  items  are  approximately  apportioned  on  the  best  apparent  basis. 


48 


49 


'i- 


\mm 


The  cost  of  producing  one  hundred  pounds  of  milk,  according  to  the 

To  Produce  One  Hundred 


Sources  of  Information. 


Date. 


Grain. 

/ ' . 

Unit 

Amount.      G)st, 

Ton. 


Warren,  Broome  Co 28.6  lbs. 

Warren,  21  farms  in  N.  Y 29. 1 

Warren,  General  Formula 53. 1 

Bush  Dairymen's  League Sept.  15,  1917  34.7 

Brigham,  Vt.    Nov.    1,1917  23.3 

Fuller,  N.  H June,        1917  25.9 

White,   Conn 35.0 

App,  N.  J May,        1917  39.7 

Rasmussen,  Penn.  27.4 

Boston  Chamber  of  Com.,  Me Sept,       1917  33.2 

Pearson,  III    Nov.,       1917  44.0 

Cooper,  Dairymen's   League 


$55.00 
55.00 
55.64 

"siioo 

"56.66 
55.00 
54.60 


authorities  quoted  above,  is  shown  in  the  following  table 
Pounds  of  Milk. 


Silage  and  Green  Feed.  Hay. 

/ *" \     t * — 


Amount. 


Unit 
Cost, 
Ton. 


Amount 


Unit 
Cost, 
Ton. 


Labor. 


Amount. 


Unit 

Cost, 

Hour. 


Per- 
centage 
of  Net 

Cost. 


Total 
Other 
Costs. 


110.81bs 73.8  lbs 

109.4        49.4 

97.2       61.0 

105.9  $5.00  51.8 

102.1  6.00  65.6 

55.6  5.00  67.4 

136.5        64.6 

31.9       56.8 

115.4       30.2 

60.8  6.00  86.5 

188.0  6.00  50.0 

8  on 


3.42hrs 

2.37 

2.83 

$12.00  2.59 

13.00  2.96 

13.19  3.45 

2.71 

2.81 

3  37 

*i6!66  3!89 

10.00  2.42 
12.00 


84.8%  17.9% 

81.3  23.0 

83.8  19.3 

$0.30  82.2  21.6 

.25  72.5  37.9 

.23  84.7  18.1 

85.7  16.7 

.222  83.4  19.9 

.25  78.2  27.9 

.25  95.8  4.4 

30 


4 


(•• 


50 

The  report  of  the  Milk  Committee  appointed  by  the  Food  Controller 
of  Canada,  dated  November  24,  1917,  shows  that  since  the  beginning  of  the 
War  there  have  been  the  following  advances  in  prices : 

Items  Increase  in  Price 

Cows   50  per  cent 

Feeds    75  per  cent 

Labor   75  per  cent 

Butter  40  per  cent 

Cheese    50  per  cent 

Milk    30  per  cent 

"  The  cost  of  labor  on  a  dairy  farm  five  years  ago  was  $25  to  $30  per 
month.  At  the  present  time  there  is  a  floating  population  of  inefficient 
laborers  who  ask  from  $50  to  $60  a  month. 

"  Men  who  are  expert  dairymen  have  left  the  farm  for  munition  work. 

"  The  overseas  demand  for  the  condensed  product  has  resulted  in  high 
prices. 

"  Some  plants  have  been  offering  as  high  at  $3.50  per  100  lbs.  of  milk. 

"  Condensed  milk  exported  from  the  United  States  during  the  fiscal 
years  ending  June  30,  1912,  1913  and  1914  totaled  17,792,579  lbs.,  or  only 
2.27  per  cent  of  the  Allies*  requirements.  During  the  single  year  ending 
June  30,  1917,  the  export  of  condensed  milk  from  the  United  States  aggre- 
gated 269,103,213  lbs.,  or  57.2  per  cent  of  the  amount  required  by  the 
Allies." 

Advances  in  the  price  of  grain  in  the  New  York  markets  or  points 
having  the  same  rate  of  freight  as  New  York,  are : 


Food. 


Value  December  15 


1915 


1916 


1917 


Yellow  Com  (per  bu.) $0.83j4  $1 .08  $2.30 

Bran   (per  ton) 24.00  30.50  46.50 

Hay  (per  ton) 25.00  21.00  30.00 

Oats  (32  lb.  to  bu.) .46^  .58j4             .89^ 

Oil  Meal  (per  ton) 40.50  48.00  57.00 

Yellow  Meal   (per  ton) 30.00  44.00  80.00 

Gluten  Meal  (per  ton) 30.00  40.00  57.34 

The  prices  asked  for  milk  by  the  Dairymen's  League  are  based  upon 
the  grade  of  milk  known  as  "  Grade  B  "  milk  containing  3  per  cent  butter 
fat.  Up  to  September,  1917,  in  addition  to  the  price  quoted,  there  was  a 
butter  fat  premiimi  of  3c.  for  each  tenth  per  cent  of  butter  fat  above  3 
per  cent.  On  October  1,  1917,  the  butter  fat  premitmi  was  raised  to  4c. 
for  each  tenth  per  cent  above  3  per  cent.  The  average  amount  of  butter 
fat  in  all  milk  shipped  to  New  York  City  is  about  3.5  per  cent.  At  some 
seasons  of  the  year  it  is  higher,  at  other  seasons  lower  than  this.  Using  for 
the  whole  year  the  figure  3.5  per  cent,  as  representing  average  butter  fat. 


51 

the  prices  charged  by  the  Dairymen's  League  for  milk  since  October,  1915, 
appear  in  the  following  table : 


Dates 


October   . , 
November 
December 
January    . , 
February 
March    . . . 

April    

May    

June    

July    

August    . . 
September 


Price  Per 

Price  Per 

Price  Per 

100  Lbs. 

100  Lbs. 

100  Lbs. 

1915-'16 

1916-'17 

1917 

$1.76 

$2.30 

$3.30 

2.00 

2.40 

3.54 

2.00 

2.40 

3.30 

1.94 

2.35 

•  •  «  • 

1.88 

2.30 

1.76 

2.25 

1.53 

2.20 

1.41 

2.15 

1.29 

2.05 

1.47 

2.25 

1.65 

2.70 

1.72 

2.70 

Prices  prior  to  October,  1916,  are  actual  prices  taken  from  "  The  Milk  Reporter." 
Prices  beginning  October,  1916,  are  Dairymen's  League  prices  with  premium  added  for 
butter  fat  content  of  3.5  per  cent.  This  premium  was  3c.  for  each  1/10  per  cent  butter 
fat  over  3.0  per  cent  from  October,  1916,  to  September,  1917,  inclusive,  and  4c  for 
each  1/10  per  cent  beginning  October,  1917. 

The  rise  in  the  price  of  milk  for  a  period  of  two  years  is  shown  by  the 
following  table: 

Rise  in  Prices  Paid  Producers. 

Price  Per       Price  Per 
Date  100  Lbs.  Quart 

October,  1915   $1.76  $0.03782 

October,  1916   2.30  .04946 

October,   1917   3.30  .07096 

Total  Increase   $1.54.  $0.03314 


Considering  the  data  secured  by  this  Committee  from  all  sources  of 
information  on  the  subject  of  the  cost  of  milk,  the  prices  asked  by  the  pro- 
ducers seem  fair  and  reasonable. 


9.    Cost  of  Distribution. 

In  the  report  of  the  Wicks  Committee,  there  was  included  a  statement 
of  the  cost  of  distribution  of  milk,  compiled  from  the  results  of  the  audit  of 
the  accounts  of  a  number  of  large  distributing  milk  companies. 


# 


52 


These  may  be  summarized  as  follows 


Cost  Items. 

Factory  Expense    

Country  Charges   

Mfg.  Expense  

Country,  City  and  Store  Expense. 

Freight    

Branch  Selling  and  Distributing. . 

Bottles,  Caps  and  Cans 

Bottles    

Delivery  Charges  

Advertising    

General  Selling  Expense 

Store  Expense  

General  Administration  

Administration  Expense   

Administration    

Branches   

Total   Cost   Distribution 

Cost   of   milk 

Net  Profit   

Average  Selling  Price 


Borden's 

Farm 

Products  Co. 


Sheffield 
Farm  Co. 


Alex. 
Campbell 
Milk  Co. 


Clover 
Farms  Co. 


.012342 


.007252 
.018890 


.001168 
^666927 


.040579 
.036847 
.002915 

.060341 


.01109 
! 00694 


.00286 
^61360 


.00221 
! 00339 


.04009 

.03757 
.00243 

.08009 


.003444 
.004848 

,006262 


.002040 
.017328 


.002881 
.001652 

.038455 
.035365 
.002979 

.076799 


.0266 
.0069 


.0015 


.0034 


.0384 
.0355 
.0024 


.0763 


* 


It  is  interesting  to  note  the  conclusions  of  the  Wicks  Committee  after 
a  survey  of  these  cost  items.     They  are  as  follows : 

Cost  of  Milk 03797 

Country  Charges   00297 

Teaming  and  hauling 00294 

Pasteurization   00370 

Bottles  and  Caps 00241 

Delivery  expenses   02384 

Freight    00934 

Adm.,  clerical  and  adv 00319 

Total  cost  08636 

Profit    00364 

Total    09000  .09 


The  above  is  a  statement  of  the  cost  of  delivery  of  a  bottle  of  9-cent 
Grade  "  B  "  milk.  It  "  does  not  provide  for  any  reduced  profit  or  loss  on 
milk  purchased  by  the  distributor  for  which  he  may  have  no  retail  market 
at  9  cents  but  disposes  of  at  wholesale  prices  or  in  other  forms  such  as  sour 
milk,  sotir  cream,  pot  cheese,  butter,  etc."  Also  the  above  items  "  do  not 
provide  for  earnings  on  capital  invested." 

The  average  net  profits  of  the  companies  on  each  quart  of  milk  bought, 
regardless  of  whether  it  was  disposed  of  as  market  milk,  butter,  cheese,  or 
otherwise,  was  found  to  be  .0027.     *     ♦     ♦ 


53 

"  In  other  words,  the  average  profit  of  .0036  on  the  9-cent  bottle  was 
reduced  to  the  average  of  .0027  on  the  entire  purchases  by  lower  profits  or 
losses  on  wholesale  milk,  butter,  cheese,  or  products. 

"If  these  four  companies  had  paid  to  the  dairymen  of  the  State  during 
the  year  1915-1916  their  entire  profits,  capital  earnings  and  dividends  it 
would  have  brought  to  the  dairymen  less  than  12j4  cents  per  100  pounds 
more  than  they  did  receive.  But  the  dairymen  have  established  during  the 
months  from  October,  1916,  to  April,  1917,  an  increased  price  of  45  cents 
to  50  cents  per  100  pounds  or  an  increase  nearly  four  times  greater  than 
the  average  profits,  dividends  and  earnings  made  by  these  companies  during 
the  prior  year. 

"  This  business  is  conducted  on  an  extremely  competitive  basis ;  *  *  ♦ 
a  large  part  of  the  cost  arises  from  the  bitter  competition  existing  in  the 
distribution  of  the  product.  *  *  *  An  army  of  solicitors  and  sales 
agents  are  maintained.  *  *  *  Great  and  expensive  organizations  are 
maintained.  *  *  *  Overhead  charges  attributable  to  this  work  amount 
to  an  alarming  sum.  *  ♦  *  It  is  customary  to  refer  to  the  fact  that 
four  or  six  or  ten  milk  wagons  and  milk  drivers  visit  the  same  block,  *  *  * 
but  this  ignores  the  really  greater  expense  of  the  silent  army  of  retainers. 
♦  *  *  Not  only  do  we  find  in  single  blocks  these  wagons  and  horses, 
but  on  the  same  block  six  solicitors ;  six  route  superintendents ;  six  staffs  of 
clerks  and  bookkeepers.  *  *  *  The  distribution  of  milk  is  a  public 
service,  which,  to  be  put  upon  an  economic  basis,  requires  public  regulation 
to  the  end  that  all  unnecessary  services  even  of  a  competitive  kind  may  be 
eliminated. 

"  Distribution  of  Milk  Should  Be  a  Regulated  Public  Service." 
"  It  is  safe  to  assert  that  the  consumer  in  the  City  of  New  York  pays 
several  millions  of  dollars  annually  for  the  privilege  of  having  all  the  numer- 
ous purveyors  of  this  necessity  of  life  engage  in  attempts  to  serve  him.  *  *  * 
A  milk  supply  is  as  much  a  daily  necessity  and  even  more  so  than  gas  and 

electricity. 

"  It  certainly  seems  as  if  the  dairymen  of  this  State  and  the  distributors 
with  their  invested  capital,  and  the  consumer,  should  co-operate  to  the  end 
that  these  unnecessary  competitive  wastes  be  eliminated  and  the  dairymen's 
milk  brought  to  the  consumer  at  the  lowest  possible  expense.     ♦     *     ♦ 

"  The  investigations  of  the  Committee  lead  to  the  conclusion  that  under 
the  present  competitive  system  it  takes  almost  as  many  men  to  bring  the 
dairyman's  milk  to  the  consumer  as  there  are  dairymen  engaged  in  the 
production  of  milk  with  all  their  employees.  This  is  the  result  of  the  purely 
competitive  basis  upon  which  the  business  is  handled.  Three  or  four  milk 
stations  are  being  maintained  with  a  separate  force  of  employees  to  collect 
or  receive  the  dairymen's  milk  at  many  points  where  one  well-equipped 
station  with  a  competent  force  could  do  all  the  collecting  at  one-fifth  the 
present  expense.     This  unnecessary  duplication  of  service  follows  with  all 


H 

its  attendant  overhead  and  capital  investment  from  the  country  milk  station 
until  the  bottle  of  milk  is  finally  deposited  at  the  consumer's  door.  A  large 
part  of  this,  in  the  judgment  of  this  Committee,  could  and  should  be  elim- 
inated. *  ♦  *  xhe  only  solution  possible  is  to  limit  and  leave  only  those 
in  the  field  which  the  service  actually  requires.  This  is  just  as  obvious  in 
the  case  of  milk  as  it  is  in  gas  or  any  other  daily  necessity  supplied  in  small 
quantity  to  the  consumer. 

"  There  is  no  milk  trust  controlling  the  purchase  and  sale  of  market  milk 
in  the  city  of  Buffalo.  There  is  none  in  Rochester;  there  is  none  in  Syra- 
cuse ;  there  is  none  in  Utica ;  there  is  none  in  Albany ;  nor  in  any  city  between 
Albany  and  New  York,  nor  in  any  town  or  village  of  the  State.  There  is 
no  milk  trust  controlling  the  purchase  and  sale  of  milk  in  the  City  of  New 
York.  Instead  there  is  sharp  and  bitter  competition,  so  far  as  the  records 
of  this  Committee  disclose,  in  each  and  every  one  of  the  places.  There 
are  four  stations  in  many  places  where  one  could  collect  the  milk.  There 
are  four  outfits  of  station  managers  and  employees  in  many  places  where 
one  could  do  the  work.  Every  intelligent  person  who  has  ever  discussed 
the  question  concedes  that  there  are  four  horses  and  wagons,  four  or  five 
or  six  groups  of  solicitors;  four  or  five  or  six  separate  organizations  and 
overhead  charges  duplicating  work  that  one  of  each  could  well  perform. 

"  There  is  too  much  capital  already  invested  in  the  business.  ♦  *  * 
Here,  then,  is  the  waste  and  the  loss.  ♦  ♦  ♦  Instead  of  introducing 
more  exp)ensive  competitors  in  the  field  to  waste  more  money  of  the  con- 
sumer, the  State  should  endeavor  by  judicious  legislation,  to  permit  the 
elimination  of  all  unnecessary  investments  both  of  labor  and  capital  and 
effectively  control  the  business  operations  of  the  remainder." 

Testimony  submitted  by  Mr.  Loton  Horton  of  the  Sheffield  Farms 
Company  calls  attention  to  the  fact  that  the  percentage  of  profit  on  the 
total  business  of  the  company  for  the  past  4  years  has  been : 

Date  Selling  Profit 

1914 6.64 

1915 6.36 

1916 4.61 

1917  (first  6  months) .238 

The  costs  of  doing  business  for  the  month  of  September,  1917,  were 
given  by  Mr.  Horton  as  follows: 

Cost  Items  Cost  per  Quart 

Milk 0608 

Conntry   Station    .0056 

Freight    0084 

Gty  Plant 0081 

Bottles,  Caps,  etc 0045 

Total 0874 

To  this  must  be  added  overhead  charges  and  the  cost  of  retailing. 


f 


55 

Mr.  Weiant,  President  of  the  Borden's  Farm  Products  Company,  testi- 
fied as  follows: 

"  There  was  invested  in  the  business  of  this  Company  as  of 
August  31,  1917,  $16,491,117.10.  In  this  figure  no  good  wUl  is 
included  nor  any  other  intangible  assets.  We  purchase  now  the  pro- 
duct of  about  8,000  farms,  and  prior  to  October  1,  the  product  of 
about  10,000  farms. 

**  The  Company  owns  approximately  225  country  receiving 

stations. 
"  Operates  6  city  pasteurizing  plants. 
'*  74  city  branches  and  stores. 
"  Employs  over  5,000  persons. 
"  Payroll  between  four  and  five  million  dollars. 
"Vehicle  investments,  $800,000. 
"  3,000  horses,  costing  $800,000. 
**  Harness,  $100,000. 
**  Food  for  horses,  $500,000. 
**  Bedding,  $50,000. 
"  Ice  bill,  $275,000. 
"  Freight,  $1,750,000. 
"  Veterinary  forces,  7. 
"  Inspectors,  60. 

Full  time  inspectors,  60. 

Half  time  inspectors,  30. 

Cost  of  inspection,  $100,000.  * 

Repair  Shop,  $200,000. 

Employees  in  repair  shop,  200. 

Wagon  routes,  1,900. 

Loss  on  bottles,  boxes  and  cans,  $450,000. 

One    week's    credit    to    customers,    interest    account    on 
$1,000,000— $75,000. 

"  Milk  was  soM  to  the  consumer  at  too  low  a  price  during  the 
years  of  1909  to  October,  1916,  when  it  retailed  at  9  cents.  This 
was  also  true  of  1916  and  1917  at  10  cents.  There  was  an  inade- 
quate profit  to  the  producer  during  the  greater  part  of  that  period 
and  this  continued  up  to  a  year  or  so  ago. 

"  It  is  an  unsound  business  practice  among  distributors,  of  charg- 
ing one  price  all  the  year  around. 

"  All  during  the  months  of  October,  November,  December,  Jan- 
uary, and  occasionally  September  and  February,  our  Company 
actually  lost  money  every  year  and  made  its  loss  up  and  earned  Its 
profits  in  the  remaining  months  of  the  year. 


if 


tt 


it 


tt 


it 


t* 


tt 


it 


Ml 


« 


56 

There  is  a  reduction  in  consumption  following  increase  in  retail 
price. 

"  The  increase  since  September,  1916,  is  5  cents  per  quart  for 
Grade  B  milk  delivered  in  bottles.  4  cents  is  going  to  the  producer 
and  1  cent  to  the  distributor.  58  per  cent,  of  our  fluid  sales  repre- 
sent retail  bottle  business  at  14  cents  per  quart  for  Grade  B  and  15 
cents  for  Grade  A.  42  per  cent,  of  the  business  is  wholesale  through 
more  than  5,000  stores  at  an  average  price  of  a  fraction  over  10  cents 
per  quart,  and  the  consumer  is  able  to  purchase  loose  milk  at  11  cents 
per  quart. 

"  Month  of  August,  1917,  number  of  quarts  of  milk  purchased 
and  sold,  25.379,138. 

"  Value  of  sales,  $2,942,759.46. 

"  Received  for  each  quart,  average  of  .11595.  Against  this  must 
be  charged  oflF  the  following  items  of  cost : 


G>st  Items  Total 

Milk   $1,491,427.54 

Freight  212,446 .  94 

Factory  Expenses    580,255.81 

Delivery  Expenses 554,411.89 

General  Administrative  Expenses  35,760.55 

Total  Cost  2,874,302 .  73 

Net  Profit   68,456.73 


Per  Quart 


.05877 
.00837 
.02286 
.02184 
.00141 
.11325 
.00270 


"  For  the  12  months  ending  June  30,  1917,  there  was  no  net 
profit,  but  a  loss  of  $115,686.86.  This  represents  a  loss  in  percentage 
of  sales  of  .53  per  cent.,  and  of  .71  per  cent,  on  the  investment. 

"  For  the  month  of  August,  1917,  profits  were  $68,456.73.  The 
average  net  profit,  .0027  per  quart.  The  profit  on  sales  of  2.33  per 
cent,  and  on  the  investment  of  .00412  per  cent. 

"  The  entire  elimination  of  distributors*  profits  for  the  past  year 
would  have  resulted  in  the  saving  of  nothing  per  quart  to  the  con- 


sumer 


>» 


Mr.  John  J.  Dillon  testified  that,  in  his  opinion,  milk  could  be  taken 
from  the  farmers'  hands  in  the  country  at  any  time,  pasteurized  and  treated 
in  the  country,  brought  to  the  city  and  delivered  to  grocery  stores  at  a  cost 
of  1^  cents  over  the  price  paid  to  the  producer,  and  that  this  would  mean 
that  Grade  B  milk  could  be  dipped  out  of  cans  and  sold  from  stores  at  9 
cents  per  quart.  He  also  testified  that  it  was  his  opinion  that  milk  could 
be  put  in  bottles  and  pasteurized  and  delivered  to  stores  at  cost  of  2%  cents 
above  the  price  paid  to  the  producer.  This  means  that  it  could  be  delivered 
to  stores  in  bottles  at  10  cents  and  sold  by  them  at  retail  for  11  cents  per 
quart. 


57 

The  witness  failed  to  furnish  any  data  based  on  actual  business  or  on 
experimental  tests  to  substantiate  his  estimates  of  cost. 

Mr.  Van  Son,  Sales  Agent  of  the  Co-operative  Milk  Producers'  Mar- 
keting Association,  stated  that  operations  for  6  months  showed  a  profit  of 
$800,  but  that  there  were  losses  for  October  and  November,  due  to  surplus 
milk  and  to  the  purchase  of  milk  cans,  amounting  to  $15,000. 

Mr.  Thompson,  the  Treasurer  of  the  Co-operative  Milk  Producers* 
Marketing  Association,  stated  that  he  thought  it  possible  for  farmers  to 
operate  country  plants  cheaper  than  the  dealer  could. 

For  the  month  of  July,  1916,  the  Borden's  Farm  Products  Company 
made  a  profit  on  Grade  B  milk  of  $75,224.96  as  compared  with  the  month 
of  July,  1917,  when  the  company  made  a  profit  of  $34,360.90  on  the  same 
grade  of  milk 

For  the  month  of  October,  1917,  the  data  shows  a  net  loss  by  this  com- 
pany of  $54,483.74  on  the  sale  of  Grade  B  milk. 

For  comparison  with  the  results  obtained  by  the  Wicks  Committee,  the 
Mayor's  Committee  on  Milk  secured  similar  data  from  five  of  the  large  dis- 
tributing companies  for  ten  months  ending  November  1,  1917. 

The  following  were  the  results  of  this  survey: 


Empire 
Cost  Items.  State 

Dairy  Co. 

Average  Selling  Price,  Quart      .08680 
Amount  paid  to  Producers. . .       .05627 

Country  Station  Expenses 00269 

Freight 00563 

City  Station  Expenses 01107 

Delivery  00857 

Cartage,  Ferriage   

Factory  Expense 

Administration,   Clerical   and 

Overhead  00203 

Depreciation   00193 

Total  Cost  of  Distribution. . .       .03192 

Total  Cost 08819 

Profit  or  Loss L  .00139 


Mutual 

McDer- 

mott  Co. 


Clover 
Farms  Co. 


Alex. 
Campbell 
Milk  Co. 


Borden's 
F.  P.  Co. 


.08322 
.05196 


.01438 
:6i683 


.00319 
.00109 


.03549 

.08747 

L. 00425 


.06855 
.05645 
.00911 
.00704 


.01358 


.00430 


.03483 

.09128 

L. 00273 


11628 
05782 
00408 
00966 
00921 
02820 


.093144 
.045685 
.014711 
.007984 
.023738 


00470 


.03605 

.09387 

P. 00241 


.00181 


.047614 

.093299 

L. 000155 


In  the  above  tabulation  the  items  are  not  accurately  comparative  for  the 
reason  that  in  the  case  of  the  Borden  Company  the  figures  consist  of  aver- 
ages for  the  year  ending  June  30,  1917,  while  in  the  cases  of  the  other  five 
companies  the  figures  are  averages  for  the  first  ten  months  of  the  year  1917. 
In  another  respect  the  figures  are  not  comparative,  namely:  because  the 
items  of  cost  are  not  uniform.  The  bookkeeping  methods  of  the  six  com- 
panies do  not  correspond  and  the  groupings  of  their  costs  do  not  fall  under 
the  same  heads,  excepting  in  a  few  instances.    For  example,  freight  means 


I 


V* 


59 


III 


the  same  thing  but  under  other  items  country  station  and  city  station  may 
be  combined  under  factory  expense,  and  delivery  may  include  cartage,  ferri* 
age  and  depreciation.  Also  administration  may  include  some  items  in  the 
cost  of  delivery.  The  figures  presented,  however,  represent  the  best  analysis 
that  could  be  made  from  the  account  books  of  the  companies,  and  while  the 
differences  noted  above  make  exact  comparison  impossible,  yet  the  total  cost 
of  delivery  in  each  instance  is  correctly  represented. 

Comparison  of  the  data  contained  in  the  above  tabulations  can  be  made 
up  arranging  the  total  items  in  columns  as  follows : 


Company, 

Price  Paid 
Producer 

Cost  of 
Distribution 

Averajfe 
Selling  Price 

Profit  or  Loss 
Per  Quart 

1916 

- 

Borden    

Alex.  Campbell  . . 

Qover  Farms  

Sheffield   Farms... 

.036847 
.035365 
.03550 
.03757 

.040579 
.038455 
.03869 
.04009 

.080341 
.076799 
.07629 
.08009 

.002915  profit 
.002979  profit 
.00211    profit 
.00243    profit 

1917 

Borden  

Alex.  Campbell  . . . 

Clover  Farms  

Empire   State   

Mutual  McDermott 

.045685 

.05782 
.05645 
.05627 
.05198 

.047614 

.03605 

.03483 

.03192 

.03549 

.093144 

.11628 

.08855 

.08680 

.08322 

.00015    loss 
.00241    profit 
.00273    loss 
.00139    loss 
.00425    loss 

A  survey  of  the  above  figures  shows  that  there  was  an  increase  of  about 
2c.  per  quart  paid  to  producers  while  the  increased  selling  price  with  the 
exception  of  one  company  averaged  about  Ic.  per  quart. 

The  cost  of  distribution  varied,  in  one  company  being  greater,  in  two 
others  slightly  less.  The  net  result  of  the  transaction  of  paying  the  pro- 
ducer the  additional  2c.  was  that  four  out  of  five  distributing  companies  on 
the  list  of  1917  sustained  losses  on  each  quart  of  milk  sold  as  shown  in 
the  figures  in  the  last  coltunn. 

The  actual  losses  of  three  of  the  companies  for  the  ten  months  of  1917 
ending  November  1st,  were: 

Company  No.  1— $169,574.54 
Company  No.  2 —  42,256.98 
Company  No.  3 —  52,873.19 

One  of  these  companies  was  forced  into  the  hands  of  a  receiver  as  a 
result  of  these  losses. 

A  more  accurate  comparison  of  the  cost  items  in  distribution  of  1916 
compared  with  the  cost  items  of  1917  is  shown  in  the  figures  obtained  from 
the  extensive  and  detailed  audit  made  of  the  books  of  the  Borden's  Farm 
Products  Company  by  Mr.  Herbert  B.  Hawkins,  certified  public  accountant. 
in  the  employ  of  the  Committee. 


It  is  impossible  to  include  more  than  a  few  of  the  figures  contained  in 
this  extensive  and  detailed  audit.  The  accountant's  report  covers  125  pages 
and  is  a  very  extensive  and  detailed  piece  of  work,  involving  not  only  the 
checking  up  of  all  book  entries  with  the  original  vouchers  but  the  classifica- 
tion and  grouping  of  cost  items  in  numerous  ways.  Among  these  is  a 
statement  of  the  decrease  in  profit  due  to  variations  in  sales  and  cost  for 
the  years  ending  June  30,  1916,  and  June  30,  1917.  These  are  reduced  to  a 
unit  basis  and  are  shown  in  table  (pp.  60-61). 

It  must  be  borne  in  mind  that  the  figures  in  table  (pp.  60-61)  are  only 
up  to  June  30,  1917,  and  do  not,  therefore,  include  the  increase  in  costs  which 
have  occurred  since  that  date.  They  indicate,  however,  six  items  showed 
increases  of  expense  which  added  to  the  cost  of  distribution  more  than  one 
and  one-half  cents  per  quart,  so  that  the  year's  business  in  1917  was  done  at 
a  loss  of  .000155  pet  quart  or  $29,832.72  as  compared  with  a  profit  of 
.002611  per  quart  or  $571,460.27  on  the  business  transacted  in  the  year 
1916. 

A  more  accurate  method  of  determining  the  exact  increase  of  cost 
items  consists  in  comparing  the  actual  costs  for  the  year  1917  with  the 
percentage  costs  of  1917  applied  to  1916  sales.  This  is  shown  in  the 
following  tabulation : 


Cost  Iteir?.  1916. 

Cost  of   Milk 042719 

Factory  Expense   014661 

Freight  008408 

Branch   Selling  and   Distributing 021900 

General  Selling  Expense 001354 

General  Administration  — 001074 

Total  ! 090117 

Net  Profit    003027 

Net  Loss    


1917. 


Increase.    Decrease. 


045685 

.002966 

014711 

.000050 

007984 

.666424 

022242 

.000342 

0014% 

.000142 

001181 

.000107 

•  •  •  •  •   ■   • 

093229 

.003607 

.000424 

oooiss 

60 


Borden's  Condensed  Milk  Company-^Farm  Products  Division,  and  Borden's  Farm 
and  Losses  for  Fiscal  Year  June  30.  1916.  and  Fiscal  Year  June  30,  1917,  for 
Cream  or  Other  By-Products. 


1916 
Amount. 

Pounds  of  Milk  Purchased 470,463,698 

Equivalent  in  Quarts  of  Milk  Sold 218,820,305 

Sales    $17,580,229.78 

Cost  of   Milk , $8,062,763.23 

Factory  Expenses   2,767,008.82 

Freight    1,586^56.65 

Branch  Selling  and  Distributing  Expenses..  4,133.400.35 

General    Selling   Expenses 255,634.22 

General   Administration    Expenses 203,106. 13 

Total  Cost  and   Expenses $17,008,769.51 

Net  Profit   $571,460.27 

Net  Loss    


Quart  Cost 

and 
Selling  Price. 


1917 
Amount. 


413,952,502 
192,536,047 


080341  $17,933715.21 


036847 
012646 
007252 
018890 
001168 
000927 


$8,796,129.29 

2332,356.31 

1,537,208.69 

4,282,435.37 

288.067.75 

277,350.52 


077730  $17,963,547.93 


002611 


$29^32.72 


m 


Products  Co.,  Inc.,  Successors  After  May  1,  1917. -Comparative  Statement  of  Profits 
Eastern  Routes  on  Total  Milk  Purchased.  Reduced  to  Quarts,  and  Sold  As  Milk, 


Quart  Cost 

and 
Selling  Price. 


Increase 


Decrease. 

A 


Percentage  of  Increase 
or  Decrease 


Amount.     Per  Quart.      Amount.     Per  Quart.       Amount.    Per  Quart 


.045685  $733,365.96 

.014711  65,347.49 

.007984        

.022242  149,035.01 

.001496  32,433.53 

.001181  24,244.39 


,093299  $954,778.42 


.000155 


56,511.196 
26,284,258 


.093144  $353,485.43    .012803 


.006838    

.002065    

.000732  $49,647.96 

.003352        

.000328        

.000254        


.015569 


$601,292.99 


2.01%  15.93% 


9.09% 
2.36% 
3.12% 
3.60% 
12.68% 
11.93% 


23.98% 
16.32% 
10.09% 
17.74% 
28.08% 
27.40% 


5.61%         20.03% 


.002766       105.22%        105.93% 


^    . 


f  N 


62 

From  the  figures  contained  in  the  extensive  audit  of  the  Borden  Com- 
pany, the  accountant  has  submitted  a  summary  consisting  of  a  statement  of 
the  unit  cost  of  the  distribution  of  a  quart  of  Grade  "B"  milk  for  October. 
1917,  whether  sold  in  bottles  on  retail  routes,  or  in  bottles  at  wholesale 
to  retail  stores,  or  in  bottles  at  the  company's  own  stores,  Or  by  the  quart 
from  cans.     This  statement  is  shown  in  the  following  tabulation: 

Statement  of  Unit  Cost  of  Distribution  of  a  Quart  of  Grade  ''B"  Milk,  for 
October,  1917,  Sold— (a)  In  Bottles  on  Retail  Routes;  (6)  In  Bottles 
at  Wholesale  to  Retail  Stores;  (c)  In  Bottles  at  Company's  Otvti 
Stores;  (d)  By  the  Quart  from  Cans. 


■ 

(a) 

Quart 

Bottle 
Grade  "B" 
Milk  Sold 
on  Routes. 

(b) 
Quart  Bottle 
Grade  "B" 
Milk  Sold  to 
Retail  Stores 
at  Wholesale. 

(c) 

Quart  Bottle 

Grade  "B" 

Milk  Sold 

at  Company's 

Own  Stores. 

(d) 

Quart  of 
Grade  "B" 
Milk  Sold 
Wholesale 

in  Cans. 

Cost  of  Flurd   

.074250 
.001366 
.004400 
.002561 

.014091 
.008440 

.074250 
.001366 
.004400 
.002561 

.014091 
.008440 

.074250 
.001366 
.004400 
.002561 

.014091 
.008440 

.074250 
.001366 
.004400 
.000320 

.008354 
.008440 

Country   Overhead    

Country  Handling  Expenses 

Bottles  and   Cans    

City  Pasteurizing  Plant  and 

Bottling    Expense    

Freight    

Sub    Total    

Delivery  Overhead    

Delivery    Direct   Expense... 
General   Administration   

Total  Cost  of  Distrib- 
ution     

.105108 

.105108 

.  105108 

.097130 

.002331 
.035280 
.001710 

.002331 
.025238 
.001710 

.002331 
.024449 
.001710 

.000699 
.007040 
.000513 

.144429 

. 134387 

.133598 

.105382 

Selling  Price,  Retail 

.Selling     Price     to     Grocery 

Stores    

Selling  Price  in  Own  Stores 
Selling  Price  in  Cans 

.14 

.13 

!i4"' 

;i6"  ■ 

Profit  per  Quart   

.004429 

.004387 

.006402 

Less   per   Quart 

.005382 

From  the  above  tabulation  it  appears  that  on  Grade  B  bottle  milk  sold 
from  wagons  or  to  grocery  stores  there  is  a  loss  of  more  than  4/10  of  a  cent 
per  quart.  On  wholesale  milk  sold  in  40  quart  cans  there  is  a  loss  of 
more  than  5/10  of  a  cent  per  quart.  On  the  other  hand,  in  milk  sold  from 
the  company's  own  stores  in  bottles  at  14c.  per  quart  there  is  a  profit  of 
.006402  per  quart.  If  this  milk  were  sold  at  13c.  per  quart  there  would  be  a 
loss  of  .003598  per  quart. 

There  is  no  reason  to  believe  that  it  would  be  to  the  advantage  of  any 
of  the  large  retailers  of  New  York  City  to  do  business  at  a  loss. 


63 

The  severe  losses  sustained  by  several  of  the  companies  during  the 
year  1917  is  clear  indication  of  the  fact  that  even  the  recent  advances  in  the 
retail  price  of  milk  have  not  been  sufficient  to  pay  the  cost  of  delivery  with- 
out serious  losses  to  the  majority  of  the  retailers. 

A  careful  audit  of  the  books  of  the  Borden's  Farm  Products  Co.  estab- 
lished the  integrity  of  the  cost  items  entered  on  their  books  and  these  are 
substantiated  by  the  statement  obtained  from  the  books  of  the  other  com- 
panies. 

The  list  of  cost  items  cannot  be  shortened  in  any  way  under  the  pres- 
ent system  of  distribution,  and  the  size  of  each  item  seems  not  only  to  be 
reasonable  under  present  conditions,  but,  as  a  matter  of  fact,  too  small  to 
permit  the  payment  of  dividends  on  the  stock  invested  in  these  companies. 

10.     Surplus  Milk. 

One  of  the  most  serious  problems  facing  the  industry,  whether  of  the 
producing  or  distributing  branch,  consists  in  surplus  milk.  This  surplus 
is  due  to  the  fact  that  the  supply  does  not  correspond  with  the  demand. 
At  the  season  of  the  year  when  cows  are  first  put  on  pasture  there  is  a  great 
over-production.  During  the  hot  weather  of  July  and  August  there  is 
usually  a  shortage.  Again  in  October,  when  grain  feeding  begins,  there 
occurs  an  increase  in  production,  although  not  so  great  as  in  May  and  June 
and  not  exceeding  the  demand. 

Just  how  great  the  volume  of  surplus  milk  is  in  the  New  York  market 
is  shown  by  the  chart  on  page  64 . 

The  solid  line  shows  the  quantity  of  milk  produced  by  the  dairy  farmers 
shipping  milk  to  New  York  City  for  each  month  of  the  year.  This  fluctua- 
tion in  quantity  was  ascertained  by  a  comparison  of  the  quantity  of  milk 
produced  at  a  large  number  of  the  shipping  stations  in  the  producing  terri- 
tory. It  will  be  noted  that  the  volume  enormously  increases  during  the 
months  of  May  and  June  and  decreases  during  the  months  of  July,  August 
and  September,  rising  again  during  October.  The  dotted  line  in  the 
chart  shows  the  quantity  of  milk  annually  consumed  by  New 
York  City.  This  is  made  up  by  study  of  the  quantity  sold  in  the 
city  for  each  month  during  several  years  past.  It  is  clear  that  the  supply 
produced  on  the  dairy  farms  shipping  to  New  York  City  does  not  corre- 
spond at  all  with  the  quantity  consumed.  During  that  period  of  the  year 
when  the  supply  exceeds  the  demand  there  is  a  surplus  which  cannot  be 
sold  as  fluid  milk  and  must  be  marketed  as  one  of  the  milk  products,  either 
butter,  cheese,  condensed  milk,  milk  powder,  casein  or  milk  sugar.  The 
greater  part  of  this  surplus  is  manufactured  into  butter,  and  the  butter  price 
is  a  fair  estimate  of  the  price  at  which  the  surplus  can  be  marketed.  During 
that  period  of  the  year  when  there  is  a  shortage  of  milk,  because  the  quan- 
tity produced  is  less  than  the  quantity  consumed  by  the  city,  this  shortage  has 
to  be  made  up  by  the  distributors,  who  obtain  an  additional  supply  of  milk 


64 


ii 


« 


65 

from  territory  outside  of  the  regular  fluid  milk  zone  or  from  shippintr 
stations  which  during  most  of  the  year  are  producing  butter  and  cheese. 

A  study  of  the  chart  showing  the  fluctuation  in  the  supply  and  demand 
for  New  York  City  shows  that  the  annual  surplus  average  for  five  years 
amounted  to  6,857,000  forty-quart  cans,  or  582,945,000  pounds.  If  the 
average  butter  fat  on  this  market  was  3.6  per  cent,  each  100  pounds  of  milk 
would  make  4.4  pounds  of  butter  and  88  pounds  of  skim  milk. 

It  must  be  borne  in  mind  that,  since  milk  is  perishable,  all  surplus  milk 
must  be  handled  and  sold  as  surplus,  and  unless  artificial  refrigeration  is 
widely  practised  cannot  be  used  to  make  up  deficits  occurring  at  other  times. 
Consequently,  it  is  not  proper  to  subtract  the  shortage  from  the  surplus, 
but  to  consider  the  entire  surplus  as  milk  that  must  be  marketed  at  a 
less  price  than  the  fluid  supply.  In  the  chart  showing  the  quantity  of 
surplus  milk  produced  by  the  dairymen  shipping  to  New  York  City  during 
the  period  of  five  years,  the  amount  of  surplus  milk  amounted  to  582,945,000 
pounds  per  year.  If  this  were  made  into  butter  from  30  per  cent  cream  and 
the  butter  and  skim  milk  were  marketed  the  amount  of  money  received  is 
shown  in  the  following  table: 


Products. 


Butter  at  .3884  Butter  at  .3884  Butter  at  .3884 
No.  of  lbs.        Skim  at  .75  Skim  .50  Skim  .00 


Surplus    582,945,000        

Butter    (82%'   fat) 25,649,580  $9,962,286.87    $9,962,286.87    $9,962,286.87 

Skim    512,991,600      3,847,497.00      2,564,998.00        

Butter    Milk    44,303,820        


Total  Receipts   $13,809,783.87  $12,527,284.87    $9,962,286.87 

If  sold  as  milk  at  $2.44  per  100 $14,223,858.00  $14,223,858.00  $14,223,858.00 

Loss    $414,074.13    $1,696,573.13    $4,261,571.13 

Loss  per  100  lbs.  surplus .071                   .291                   .731 

Loss  per  quart  surplus .00153               .00626               .01572 


Loss  on  surplus  applied  to  entire  supply, 
per  quart    


,00042 


.00173 


.00436 


In  the  above  table  the  price  of  butter  is  quoted  at  .3884,  which  is  the 
average  for  the  past  year;  and  the  price  of  milk  at  $2.44  per  hundred 
pounds.  Skim  milk  is  sold  at  various  prices.  In  the  table  75c.  per 
hundred,  50c.  per  hundred  and  zero  are  used.  Buttermilk  is  often  not 
marketed  at  all,  and  the  price  has,  therefore,  not  been  included. 

In  the  above  tabulation  it  appears  that  the  losses  on  surplus  milk,  when 
made  into  butter  and  the  skim  milk  sold  at  75c.  per  hundred,  would  be  more 
than  $414,000.00  per  year.  With  skim  milk  at  50c.  per  hundred  the  losses 
would  be  $1,696,573.13  per  year,  and  if  the  skim  milk  were  not  sold  at  all 
the  loss  would  be  $4,261,571.13  per  year.  These  figures  mean  losses  per 
hundred  pounds  of  surplus  milk  of  .071,  .291  and  .731.  If  the  losses  on  surplus 


ft 


66 

milk  are  applied  to  the  entire  supply  and  the  surplus  milk  is  sold  for  butter 
only,  with  no  returns  for  skim  milk  or  butermilk,  the  tax  of  the  surplus  on 
each  quart  of  fluid  milk  sold  in  the  city  would  be  .00436,  or  nearly  half  a 
cent  a  quart. 

If  the  figures  for  the  quantity  of  milk  consumed  by  New  York  City  and 
the  quantity  produced  by  the  dairy  farms  are  tabulated,  the  monthly  fluctua- 
tions and  differences  between  the  supply  and  the  demand  are  plainly  shown. 
For  example,  in  the  month  of  May,  during  the  last  three  years,  New  York 
City  has  consumed  2,367,000  cans  of  milk,  while  the  dairymen  produced 
4,420,000  cans,  creating  a  surplus  of  86  per  cent.  On  the  other  hand,  for 
the  month  of  August  the  average  for  three  years  shows  that  the  city  con- 
sumed 2,299,000  cans  of  milk,  while  the  dairy  farmers  produced  during  that 
month  only  1,380,000  cans,  creating  a  shortage  of  40  per  cent.  Again,  in 
the  month  of  January,  averages  show  that  the  city  consumed  1,806,000  cans, 
while  the  dairymen  produced  2,140,000  cans,  creating  a  surplus  of  18j^ 
per  cent. 

During  the  entire  year,  adding  all  surpluses  and  subtracting  all  deficits 
shows  a  net  surplus  over  and  above  the  demand  of  18j^  per  cent.  That  is 
to  say,  the  dairymen  shipping  milk  to  the  City  of  New  York  actually  pro- 
duced 18J^  per  cent  more  milk  than  the  city  can  consume  as  fluid  milk. 

Surplus  milk  is  commonly  made  into  butter,  cheese,  condensed  milk  and 
milk  powder.  These  milk  products  sell  most  of  the  year  at  prices  which 
result  in  a  loss  for  milk  manufactured  into  them  from  the  regular  sources 
of  the  fluid  milk  supply.  The  retailers  in  fluid  milk  in  the  past  have  been 
compelled  to  buy  all  of  the  milk  produced  by  the  dairymen  in  the  dairy 
districts  where  their  shipping  stations  are  established.  In  recent  months 
three  new  factors  have  had  a  marked  influence  on  surplus  milk. 

(1)  The  great  advance  in  price  of  fluid  milk,  which  has  reduced  the 
demand,  thereby  creating  an  artificial  surplus.  For  the  first  time  in  ten 
years  there  was  more  milk  produced  in  August  than  the  market 
would  consume.  While  this  was  partly  due  to  weather  conditions  it  is 
believed  it  was  largely  due  to  the  stimulation  of  higher  prices  paid  to  the 

•producer  and  to  a  lessened  demand  on  the  part  of  the  consumer.  One  retail 
company  was  compelled  to  manufacture  in  July  2,625,000  quarts  of  milk 
into  butter,  making  254,727  pounds,  costing  51}4c.  per  pound,  while  the 
market  price  for  butter  was  46c.  per  pound.  This  same  company  manu- 
factured 2,451,000  quarts  of  milk  into  cheese,  at  a  cost  of  27c.  per  pound, 
while  the  market  price  for  cheese  was  24c.  per  pound.  At  the  price  which 
producers  received  for  their  milk  in  October,  butter  would  have  cost  81c. 
per  pound. 

(2)  Another  influence  was  the  agreement  between  the  producers'  and 
distributors'  organizations,  whereby  the  distributors  closed  up  shipping 
stations  where  the  supply  exceeded  the  demand.  This  resulted  in  the  closing 
up  by  one  retail  company  of  21  stations,  and  another  retail  company  of  39 
stations  during  the  month  of  October. 


3? 


67 

(3)  The  new  market  for  condensed  milk  furnished  by  the  war  orders 

of  the  Allies. 

These  war  contracts  guarantee  a  profit  above  cost,  so  that  condensories 
are  in  a  position  to  compete  with  the  fluid  milk  market  for  the  supply.  This 
has  furnished  producers  with  an  outlet  at  higher  prices,  which  has  fortified 
them  in  their  demands  for  higher  prices  in  the  market  for  fluid  milk.  The 
fact  that  Health  Department  regulations  do  not  apply  to  condensed  milk 
has  increased  the  influence  of  the  competition  by  these  condensories. 

So  long  as  all  milk  purchased  from  a  producer  by  the  distributor  is 
paid  for  at  the  full  market  price  for  fluid  milk,  there  will  be  a  loss  on  surplus 
milk  manufactured  into  butter  and  cheese.  Butter,  cheese  and  other  milk 
products  are  normally  manufactured  out  of  milk  which  does  not  reach  the 
fluid  milk  market,  and  is  produced  by  farmers  who  do  not  receive  the  full 
price  for  fluid  milk.  Consequently,  the  price  of  butter  and  cheese  will  always 
be  controlled  by  the  price  of  milk  outside  of  the  territory  supplying  the  fluid 
milk  market. 

No  adequate  solution  has  yet  been  offered  for  the  handling  of  surplus 
milk  without  serious  losses  either  to  the  producer  or  the  distributor  of  milk. 
If  the  surplus  is  thrown  into  the  hands  of  the  distributor  he  sustains  the 
losses  and  is  compelled  to  make  up  such  losses  by  additional  charges  for  fluid 
milk.  On  the  other  hand,  if  the  surplus  milk  is  thrown  into  the  hands  of  the 
producer  he  is  compelled  to  sustain  losses  on  milk  manufactured  into  butter 
or  cheese  or  through  the  disposition  of  surplus  milk  at  prices  lower  than  the 
market  prices  for  the  fluid  product. 

In  this  emergency  a  suggestion  has  recently  been  proposed  which  seems 
to  be  worthy  of  consideration.  This  consists  in  a  plan  whereby  the  handling 
of  surplus  milk  and  the  losses  from  the  same  shall  be  shared  jointly  both  by 
the  producer  and  the  distributor.  Since  the  fixing  of  prices  either  by  the 
industry  itself  or  by  a  commission  necessarily  interferes  with  the  normal 
workings  of  the  laws  of  supply  and  demand,  it  is  certain  that  it  is  not  possible 
by  price  fixing  to  furnish  any  guarantee  that  surpluses  and  deficits  will  not 
occur.  Under  these  circumstances  the  same  mechanism  which  fixes  prices 
should  include  an  adequate  provision  for  protecting  the  industry  against 
damages  directly  due  to  price  fixing  which  results  in  losses  from  surpluses  or 
deficits.  The  plan  suggested,  in  brief,  provides  for  the  payment  of  full  price 
for  all  of  the  fluid  milk  which  can  be  sold  at  full  price  and  for  the  payment 
at  less  than  full  price  for  all  fluid  milk  which  must  be  handled  as  surplus, 
the  price  paid  for  such  surplus  to  be  the  price  at  which  the  fluid  product  can 
be  sold  as  surplus  milk  for  manufacturing  purposes,  either  butter,  cheese  or 
other  milk  products.  The  butter  price  may  be  accepted  as  probably  the 
fairest  basis  for  determining  the  price  of  surplus  milk. 

This  plan  was  actually  put  into  operation  at  a  milk  shipping  station  at 
Homer,  N.  Y.,  where,  because  of  business  conditions,  the  entire  product 
could  not  be  marketed  at  full  price.  The  dealer  and  the  producers  voluntarily 
agreed  to  co-operate  for  the  handling  of  surplus  milk.    The  producers  agreed 


% 


V     f 


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ll 


M 


J 


'i;> 


68 

to  receive  payment  at  full  price  for  all  fluid  milk  that  could  be  sold  at  full 
price  and  to  accept  payment  for  the  balance,  or  surplus  milk,  at  whatever 
price  the  surplus  milk  would  bring  when  sold  either  for  milk  powder  or 
otherwise. 

If  producers  enter  into  agreements  with  each  other  for  collective  bar- 
gaining with  the  distributors,  and  distributors  enter  into  agreements  with 
each  other  for  collective  buying  from  producers,  a  mechanism  is  furnished 
whereby  surplus  milk  can  be  easily  handled  in  a  way  entirely  fair  and  just 
to  both  parties.    To  illustrate  this  the  following  example  may  be  taken : 


Dealer. 

1    

2  

3  

Total    

Percentage    


Pounds  of    Pounds  of        Surplus 
Milk  Bought.  Milk  Sold.         Milk. 


10,000 
20,000 
50,000 


8,000 
12,000 
45,000 


2,000 
8,000 
5,000 


80,000 
100% 


65,000 
81.25% 


15,000 
18.75% 


In  the  above  table  it  appears  that  there  was  80,000  pounds  of  milk 
purchased,  of  which  65,000  pounds  was  sold  as  fluid  milk,  amounting  to 
81.25  per  cent;  the  balance,  15,000  poimds,  was  surplus  milk,  amounting 
to  18.75  per  cent.  In  this  way  the  quantity  of  milk  purchased  by  all 
retailers  of  the  City  of  New  York  and  the  quantity  sold  as  fluid  milk  and 
the  quantity  of  surplus  could  be  estimated  at  the  end  of  each  month  and  the 
percentage  of  surplus  milk  stated.  In  the  above  example  it  is  suggested  that 
the  producers  be  paid  for  81.25  per  cent  of  all  the  milk  produced  by  them  at 
the  full  fluid  price  and  that  they  be  paid  for  18.75  per  cent  of  the  milk  at  a 
price  which  corresponds  to  the  full  market  price  for  butter,  plus  the  full 
market  price  for  by-products  of  butter,  including  skim  milk  and  buttermilk. 
Such  a  plan  would  require  that  some  person,  or  commission,  in  whom  both 
producers  and  dealers  had  confidence,  should  furnish  a  statement  of  the 
total  quantity  of  fluid  milk  bought  and  sold  as  fluid  milk  and  of  the  total 
quantity  of  surplus  milk  which  could  not  be  sold  as  fluid  milk,  but  must  be 
manufactured  into  milk  products. 

From  the  producers*  standpoint  this  plan  pays  the  producer  all  that  he 
could  possibly  secure  out  of  the  business  if  he  were  marketing  the  milk 
himself.  The  producer  could  not  expect  to  sell  as  fluid  milk  any  more  fluid 
milk  than  the  market  will  absorb.  Consequently,  if  the  retailer  were  elimin- 
ated and  the  producers  were  retailing  their  own  product,  the  surplus  milk 
unsold  as  fluid  milk  and  thrown  back  on  their  hands  would  be  the  same 
surplus  which  would  be  in  the  hands  of  the  distributors  under  the  plan 
above  mentioned.  The  price  producers  would  receive  for  this  surplus  would 
be  the  same  price  they  would  receive  from  the  dealer  in  the  above  mentioned 
plan. 

It  is  a  fact  that  the  distributor  is  in  a  much  more  advantageous  posi- 
tion than  the  producer  for  the  handling  of  surplus  milk,  both  in  the  processes 


69 

of  manufacture  and  in  the  matter  of  marketing.  The  producer  could  not 
expect  to  manufacture  surplus  milk  or  market  the  same  in  any  different 
way  or  any  more  cheaply  than  these  processes  can  be  performed  by  the  large 

distributor. 

The  particular  value  to  the  producer  of  pooling  his  interests  and  arriv- 
ing at  a  percentage  of  fluid  milk  and  a  percentage  of  surplus  milk  which 
is  uniform  for  all  producers  is  that  payment  would  be  entirely  uniform  for 
all  producers.  The  irregularities  of  milk  production  in  different  districts 
and  the  differences  in  the  marketing  facilities  of  different  dealers  have  for 
many  years  been  imposing  great  hardships  or  given  advantages  to  producers 
and  distributors  which  are  unfair  to  the  industry  as  a  whole.  If  uniformity 
of  market  price  is  so  desirable  that  producers  recognize  the  importance  of 
united  action,  then  it  is  a  logical  corollary  that  there  should  be  uniformity  in 
the  percentage  and  in  the  price  of  surplus  milk  and  that  all  farmers  and 
distributors  should  be  treated  alike  in  this  matter. 

The  payment  for  fluid  milk  and  surplus  milk,  according  to  the  percent- 
age of  the  entire  supply  sold  as  fluid  milk  and  manufactured  as  surplus  milk, 
would,  however,  entail  a  severe  hardship  on  the  distributor  if  his  percentage 
of  fluid  milk  sold  and  surplus  milk  manufactured  did  not  correspond  to  the 
percentages  of  the  entire  supply.  For  example,  in  the  tabulation  above  given 
we  can  assume  that  each  of  the  three  dealers  is  compelled  to  pay  for  81.25 
per  cent  of  his  fluid  milk  at  full  price  and  for  18.75  per  cent  of  his  milk  at 
butter  prices.  Under  these  conditions  the  following  tabulation  indicates  the 
result : 


Dealer. 


Total 
Purchases. 


Paid  at 
Full  Price. 


Overpaid.    Underpaid. 


1  10,000 

2 20,000 

3 50,000 


8,125 
16,250 
40,625 


125 
4,250 


4,375 


In  the  above  table  it  appears  that  if  each  dealer  should  pay  to  his 
producers  at  full  price  for  fluid  milk  for  only  that  portion  of  his  supply 
which  corresponded  to  the  total  percentage  of  fluid  milk  sold  on  the  entire 
market,  dealer  No.  1  would  have  overpaid  for  125  pounds,  dealer  No.  2 
would  have  overpaid  for  4,250  pounds,  while  dealer  No.  3  would  have  under- 
paid for  4,375  pounds.  In  the  former  table  it  appears  that  dealer  No.  3 
actually  marketed  45,000  pounds  at  full  price,  but  in  the  lower  table  he 
paid  for  only  40,625  pounds  at  full  price.  On  the  other  hand,  dealers 
No.  1  and  2  paid  for  more  than  they  sold  at  full  price.  In  short,  dealers 
Nos.  1  and  2  would  sustain  losses  by  this  transaction,  while  dealer  No.  3 
would  have  an  unfair  gain.  It  is  obvious  that  the  adjustments  could  be  easily 
made  by  the  dealers  themselves  through  some  form  of  exchange  or  clearing 
house,  whereby  those  dealers  who  have  sustained  undeserved  losses  can  be 
recompensed  by  those  dealers  who  have  made  unmerited  profits.     The 


«  ij 


I 


1 

I 

I? 

I: 

■1 

I 


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70 

undeserved  losses  and  the  unmerited  profits  are  exactly  equal  to  each  other, 
consequently  the  exchange  could  bring  about  an  adjustment  between  the 
dealers  of  these  differences  without  affecting  their  individual  business 
interests  in  the  slightest  degree. 

The  above  plan  has  actually  been  proposed  by  the  large  distributors 
in  the  city  of  Boston  and  is  under  consideration  at  the  present  time  as  a 
solution  of  the  surplus  milk  problem  there.  The  closing  up  of  the  plants 
recently  agreed  upon  between  the  Dairymen's  League  and  the  New  York 
City  distributors  is  certain  to  result  in  disastef  and  injury  either  to  the 
producers  themselves  or  to  the  distributors.  On  the  other  hand,  since  both 
producers  and  distributors  are  interested  in  the  same  market  and  in  selling 
to  that  market  all  of  the  high  price  fluid  milk  that  the  market  will  absorb, 
it  would  seem  that  they  have  a  common  interest  in  protecting  each  other 
against  losses  from  surplus  milk  by  adjusting  the  manufacture  and  the  sale 
of  surplus  milk  among  themselves  so  that  the  burden  is  evenly  distributed 
among  all  producers  and  dealers. 

11.    Market  Prices  and  Price  Fixing. 

When  differences  occur,  as  they  necessarily  must,  between  the  price 
demanded  by  producers  for  their  product  and  the  price  offered  for  the  same 
by  the  distributors,  it  is  most  natural  to  assume  that  the  consumer,  as  well 
as  the  industry  itself,  can  be  best  protected  from  injury  through  the  action 
of  a  disinterested  tribunal  endowed  with  sufficient  authority  to  fix  prices 
for  the  producer,  distributor  and  consumer.  Uniform  prices  ajid  price  fixing 
is  a  remedy  which,  because  of  the  emergency  created  by  war  time  conditions, 
has  been  seized  upon  as  the  only  adequate  remedy  for  excessive  prices  of 
food  products.  War  time  emergency  does  create  a  condition  which  artificially 
interferes  with  the  influences  which  normally  control  prices,  to  such  a 
degree  that  such  an  artificial  remedy  as  price  fixing  may  be  justified.  On 
the  other  hand,  there  are  certain  inherent  faults  in  any  plan  of  price  fixing 
which  are  so  serious  that  in  the  long  run  such  a  plan,  even  when  carried  out 
by  a  fair-minded  and  intelligent  tribunal,  is  apt  to  bring  disaster  either  upon 
the  producer,  distributor  or  consumer. 

It  seemed  proper  for  this  Committee  to  take  up  for  consideration  at 
least  the  principles  of  price  fixing,  in  so  far  as  these  have  been  determined 
by  those  who  have  specialized  in  the  science  and  philosophy  of  economics. 
With  that  purpose  in  mind,  the  Committee  requested  Prof.  Robert  E. 
Chaddock,  of  Columbia  University,  to  attend  a  conference  to  which  were 
invited  the  representatives  of  the  producers  and  dealers  organizations.  An 
abstract  of  the  statements  made  by  Prof.  Chaddock  at  this  conference  is  as 
follows : 

"  In  any  price-fixing  program  such  as  has  been  carried  out  by  the  pro- 
ducers in  recent  months  the  assumption  is  very  likely  to  be  made  that  the 
commodity  (milk)  is  inelastic,  that  is,  that  the  demand  will  not  change  very 


71 

much  with  a  change  in  price.  Of  course,  that  is  not  true  *  *  *  as  has 
been  shown  in  connection  with  the  decreased  consumption  resulting  from 
the  high  price  of  milk  to  the  consumer,  so  that,  in  the  sense  that  the  demand 
does  change  with  a  change  in  price,  milk  is  an  elastic  commodity. 

"  The  producers  are  producing  under  varying  conditions  of  cost  *  *  * 
some  are  producing  at  a  greater  cost  and  some  at  a  lower  cost.  The 
marginal  producer  is  the  man  producing  under  the  most  unfavorable  con- 
ditions. I  do  not  know  what  the  range  is  between  the  marginal  producer  and 
the  man  producing  under  most  favorable  conditions,  but  it  must  be  a  pretty 

wide  range  of  cost. 

"  Any  cost  price  must  refer  to  a  specific  quantity.  *  ♦  *  We  natur- 
ally drop  the  marginal  man  out  first. 

"  Any  rigid  price  fixing  precludes  the  cutting  off  of  that  most  unfavored 
producer  to  decrease  the  supply  in  response  to  a  decreased  demand.  *  *  * 
No  flat  rate  for  milk  is  desirable,  because  there  is  no  command  of  the 

conditions. 

"  Where  a  monopoly  is  had  the  price  is  determined  by  the  control  of  the 
supply.  No  one  can  control  the  demand.  The  monopolist  by  controlling  the 
supply  controls  the  price.  He  slides  his  price  up  and  down  till  he  gets  to  the 
price  where  the  largest  profits  are  obtainable. 

"  Monopoly  price  fixing  by  producers  is  very  likely  not  to  work  out 
permanently  for  the  benefit  of  producers  themselves,  because  price  fixing 
is  a  two-sided  problem. 

"  If  New  York  City  has  to  have  two  and  one-half  million  quarts  a  day 
for  its  needs,  then  it  would  have  to  pay  such  a  price  as  would  bring  in  to 
the  market  two  and  one-half  million  quarts. 

"  It  seems  to  me  that  the  middleman  agency  is  probably  the  best  qualified 
to  determine  the  price.  Your  middleman  is  in  a  strategic  position  to  know 
what  he  can  buy  a  given  supply  for,  and  on  the  other  hand  what  he  can 
get  people  to  pay  for  that  supply.  The  consumer  wishes  cheap  milk  and 
the  producer  wants  to  receive  as  large  an  amount  as  he  can.  Neither  one 
of  these  parties  has  the  facilities  for  getting  together  to  determine  the  balance 
between  the  force  of  the  demand  and  the  force  of  the  supply.  The  middle- 
man's interest  combines  the  interest  both  of  the  consumer  and  the  producer. 
The  interest  of  the  middleman  ought  to  be  to  sell  a  larger  amount  of  milk 
at  a  smaller  margin  of  profit  per  unit,  rather  than  to  sell  a  smaller  quantity 
at  a  higher  price. 

"  If  we  are  to  pay  the  farmer  enough  to  get  him  to  produce  the  supply 
and  still  sell  the  supply  when  we  have  got  it,  we  have  got  to,  by  every 
means  possible,  reduce  the  expenses  in  the  distributing  function. 

"  I  doubt  the  efficiency  of  the  City  as  a  distributor  of  milk.  I  consider 
that  as  a  very  last  resort.  I  have  not  very  much  faith  in  the  efficiency  of 
the  City  of  New  York  in  conducting  the  milk  business. 

"  In  justice  to  all  producers  no  flat  rate  could  be  fixed  which  would 
treat  them  equally. 


t' 


72 

"  I  doubt  whether  you  can  fix  a  price  in  any  arbitrary  or  rigid  way. 
The  middleman  must  bid  for  more  milk  as  he  needs  it.    It  is  proper  for  a 
dealer  to  buy  milk  in  Vermont  at  a  different  price  from  the  price  he  pays 
in  Pennsylvania. 

"  I  think  it  is  economically  unsound  for  the  Dairymen's  League  to  fix 
prices  for  six  states,  because  the  price  fixed  will  not  be  on  the  principle  of 
responsiveness  to  the  demand. 

"  I  do  not  believe  you  can  put  this  thing  in  the  hands  of  a  rigid  price- 
fixing  commission,  providing  you  admit  that  New  York  has  to  have  a  certain 
milk  supply. 

"  In  the  distribution  of  milk  it  will  be  in  the  interest  of  the  consumer  to 
bring  less  competition  into  distribution  and  to  get  the  cheapest  distribution 
possible. 

"  I  think  we  ought  to  limit  competition  and  provide  for  such  combina- 
tions as  will  permit  the  cheapest  kind  of  distribution. 

"  The  next  step  in  an  American  community  would  be  to  have  some  kind 
of  a  Public  Service  body  to  demonstrate  costs  on  some  practical  basis  and 
to  show  that  the  margin  of  profit  is  not  too  large." 


12.    Economies  in  Production. 

Larger  Producing  Cows. 

For  many  years  dairy  farmers  have  been  well  aware  of  the  economies 
in  milk  production  resulting  from  the  keeping  of  dairy  cows  which  are  large 
producers. 

Nimierous  cow-testing  associations  have  as  their  primary  purpose  the 
testing  of  cows  in  local  dairy  herds,  in  order  to  inform  the  dairymen  as  to 
those  animals  which  are  low  and  unprofitable  producers  and  those  animals 
which  are  high  and  profitable  producers.  Numerous  statistics  have  been 
compiled  to  show  the  cost  of  producing  milk  as  it  is  modified  by  the  pro- 
ductivity of  the  individtial  dairy  cow.  A  good  example  of  this  difference  is 
shown  in  bulletin  No.  501 — United  States  Department  of  Agriculture, 
entitled,  "  A  Study  in  the  Cost  of  Producing  Milk  on  Four  Dairy  Farms." 
These  figures  are  taken  from  data  compiled  several  years  ago  on  costs  much 
lower  than  present  costs.  They  show  clearly,  however,  the  relation  of  the 
productivity  of  the  cow  to  the  cost  of  milk,  for  the  reason  that  the  same 
costs  were  applied  alike  to  all  cows  at  that  time : 


Production  in  Pounds, 
Per  Cow. 
2,349 
3,648 
4,596 
5,450 
6,445 
7,513 
9,049 


Cost  Per  100  Lbs. 
of  Milk. 

$3.57 
2.59 
2.29 
2.10 
1.86 
1.79 
1.70 


# 


n 

Another  set  of  figures  was  presented  by  Prof.  W.  P.  B.  Lockwood,  of 

Massachusetts  Agricultural  College,  in  his  testimony  before  the  Committee. 

He  showed  statistics  compiled  by  him  indicating  the  following  results : 

Cost 
Production  Per  Cow  Per  Year.  Per  Quart 

Less  than  5,501  lbs 0721 

5,501—7,500  lbs 0624 

Over  7,500  lbs 0552 

The  third  set  of  figures  was  presented  in  the  testimony  of  Prof.  George 
C.  White,  of  Connecticut  Agricultural  College,  Storrs,  Connecticut.  These 
results  have  been  tabulated  in  the  form  of  the  chart  shown  on  page  74. 

The  productivity  of  the  dairy  cows  supplying  milk  to  New  York  City 
market  averages  not  more  than  4,500  pounds  per  cow  per  year.  In  the  above 
tabulation  such  cows  make  milk  at  a  cost  of  about  7c.  per  quart,  which 
price  corresponds  closely  with  the  cost  as  determined  by  all  of  the  data 
compiled  on  cost  of  production  of  the  city's  supply.  There  is  no  doubt 
that  if  the  city's  supply  came  from  cows  which  were  large  producers,  the 
cost  of  production  would  be  considerably  reduced. 

From  this  it  appears  that,  in  herds  containing  over  ten  cows,  the  pro- 
duction per  cow  and  the  cost  per  quart  of  jplk  gave  the  following  figures: 

Production  Per  Cow  Per  Year.  "^ll^  ^^^  Quart. 

Over  7^00  lbs v . . . : :: :.  ;^ . . . .        4.74c. 

6,500-7,500    5.48 

5,500—6,500    5.60 

4,500-5,500    5.82 

Under  4,500  ?.  02 

i 

Only  a  small  percentage  of  the  dairymen  supplying  New  York  City  are 
members  of  the  cow-testing  associations.  There  is  no  doubt  that  there 
is  a  large  percentage  of  cows  standing  in  the  herds  of  dairymen  producing 
milk  for  New  York  City  which  are  low  and  unprofitable  producers  of  milk. 
These  animals  can  be  eliminated  immediately  by  fattening  and  selling  for 
beef.  They  are  actually  an  expense  to  the  dairyman  and  add  an  item  to  the 
cost  of  milk  which  is  an  improper  tax  on  the  consumer. 
Larger  Dairies. 

Another  factor  which  has  not  received  the  attention  it  deserves  is  the 
size  of  the  dairy  herd  itself.  It  makes  a  great  difference  how  many  animals 
are  included  in  the  dairy  herd.  It  is  one  thing  for  a  farmer  to  devote  his 
time  and  attention  to  the  care  of  one  dairy  cow  and  quite  another  thing 
for  him  to  attend  to  the  care  of  a  large  herd.  The  cost  of  keeping  a  cow 
by  herself  and  as  a  member  of  a  large  herd  are  very  different. 

It  is  clear  that  a  number  of  the  expenses  included  in  the  cost  of  pro- 
duction do  not  increase  as  rapidly  as  the  size  of  the  herd.  This  is  well 
illustrated  in  a  review  of  the  statistics  of  178  herds  reported  in  Bulletin 
No.  7  of  the  Connecticut  Agricultural  College. 

When  these  herds  are  arranged  in  order  of  size,  with  the  corresponding 
costs  of  milk  production,  it  appears  that  herds  of  50  or  60  cows  produced 


DELCEASLin  C05T  OFPQODUCIMQ  PIILK 

A5  AMOUhT  Or  MILK  PEG  CO/  IMCDEJ\5L5 

Based    on   da-fa    from    Bolle+m  Nfi7 

Connecticut    A<fcrieuHoral    Col|e.<5e^ 

fTxi-endion      3«Lrvioe. 

for  all  178  herds  listed V////A 


^^r  151  herds  con+einin^ 
over  lO  Cows — 


] 


IbSofMilK    under  over 

SnoSl^  4500     4500-5J00  ?500-b5OO  650O-T50O     JJOO 


75 

milk  at  a  cost  of  4.65  cents  per  quart,  while  herds  of  only  7  to  10  cows  pro- 
duced milk  at  a  cost  of  6.67  cents  per  quart.  If  only  these  herds  are  selected 
which  contain  cows  producing  over  6,000  pounds  of  milk  per  cow  annually, 
we  find  that  there  are  85  of  these,  and  that  the  decrease  in  the  cost  of  pro- 
duction as  the  size  of  the  herd  increases  is  even  more  regular. 
The  results  are  shown  in  the  chart  on  page  76. 

The  figures  in  this  chart  in  the  form  of  tabulation  show  the 
following : 

Number  of  Number  of  Cows 

Herds.  in  Herd.        Cost  Per  Quart 

6  30—40  4.65c. 

21  ;;"...;...'.'...; 20-^        4.97 

45  10—20  5.45 

13   '.*.'.'...'.*....'...■.'. 7-10  5.92 

Collective  Hauling. 

Statistics  from  11  milk  shipping  stations  show  that  453  farmers'  wagons 
are  used  to  haul  to  the  station  1,181  forty-quart  cans  of  milk.  This  is  a 
little  less  than  three  cans  to  a  wagon,  average  distance  of  the  dairy  farms 
being  under  three  miles.  On  a  two-horse  country  truck  it  is  possible  for 
one  man  to  haul  30  forty-quart  cans  of  milk.  Through  collective  hauling 
by  such  trucks  at  these  11  stations  it  would  require  only  44  such  wagons  to 
haul  the  same  milk  that  was  hauled  by  the  453  wagons. 

If  these  figures  should  be  applied  to  the  entire  milk  supply  of  the 
city  it  would  mean  that  there  were  now  12,500  farmers'  wagons  carrying 
milk,  from  dairy  farms  to  shipping  stations,  which  could  be  carried  by  only 
1,250  wagons.  In  other  words,  there  are  ten  times  as  many  farmers  hauling 
milk  to  shipping  stations  as  there  need  be.  These  figures  are  probably 
somewhat  exaggerated,  as  many  large  shipping  stations  have  instituted  a 
system  of  collective  hauling.  It  seems  certain,  however,  that  the  duplication 
of  wagons  hauling  milk  to  country  shipping  stations  is  much  greater  than 
the  duplication  of  wagons  delivering  milk  in  the  city.  It  is  obvious  that  the 
saving  through  the  institution  of  a  proper  system  of  co-operative  hauling 
would  be  very  great,  and  that  this  saving  would  be  felt  by  the  consumer, 
who  eventually  must  pay  the  bills  for  this  service. 

Collective  Buying  of  Grain. 

The  largest  single  item  in  the  cost  of  milk  is  the  cost  of  grain.  Little 
success  has  resulted  from  attempts  so  far  made  at  collective  buying.  The 
dairymen  shipping  milk  to  New  York  City  use  approximately  671  car  loads 
of  grain  per  month,  each  car  carrying  25  tons,  amounting  to  16,780  tons  of 
grain,  at  $55.00  per  ton,  which  is  $923,230.00  per  month,  or  $11,078,760.00 
per  year.  This  makes  the  dairymen  supplying  milk  to  New  York  City,  as  a 
group,  the  largest  single  customer  of  grain  in  the  world.  It  seems  fair  to 
assume  that  if  this  grain  were  purchased  through  one  agent,  and  the  size 


tii^ 


»i 


75 


DECPLASL  in  C05T  OF  PDODUCIM6  MILK 
A5  6IZL  or  HLDD  IHCDLA5L5 

Based  on  dota   from  Bulfetiri  11^  7 

Connecticut     Agricultural  College 

extension    Service 


For  all  IT&herd^    lifted 

for  65  herd^  producing  over 
6000lb$  of  Milk  per  Cow  dnnaally 


-C 


)l«r4 


I0£0     2030    CXMO  4O50  5(>«) 


77 

of  the  order  were  guaranteed,  some  consideration  ought  to  be  given  to  the 
size  of  the  order.  Inquiry  of  one  of  the  largest  grain  merchants  of  the 
New  York  Produce  Exchange  has  elicited  a  reply,  which  is  in  part  as 
follows : 

"  The  ordinary  dairyman  is  not  usually  in  a  position  to  buy  feed  in  car 
load  lots,  and  must  therefore  buy  from  a  retail  dealer,  who  must  charge 
about  10  per  cent  more  than  he  pays  for  the  goods,  and  not  having  storage 
capacity  must  also  buy  frequently,  preventing  him  from  availing  himself  of 
markets  when  they  are  lowest  *  *  *.  Collective  buying  through  a  pur- 
chasing agent  of  immense  quantities  makes  possible  purchases  whenever  the 
markets  warrant,  and  the  buying  of  enough  to  tide  over  what  might  appear 
to  be  a  steadily  rising  market.  Under  these  conditions  there  should  be  saved 
at  least  10  per  cent  on  the  purchase  of  feed,  as  compared  with  the  system 
under  which  feed  is  now  purchased." 

Ten  per  cent  on  $923,230.00  per  month  would  be  $92,323.00.  This 
would  be  a  net  saving  to  the  consumers  of  New  York  City  of  $1,107,876.00 
per  year.    This  item  alone  would  reduce  the  cost  of  milk  l/5c.  per  quart. 

Teaching  Dairying  in  the  Public  Schools. 

Laws  requiring  instruction  in  agriculture  in  the  common  schools  have 
been  enacted  in  the  following  States : 

Alabama,  Kansas,  California,  Florida,  Louisiana,  Mississippi,  North 
Carolina,  Oklahoma,  Tennessee,  West  Virginia,  Wisconsin,  Indiana, 
Wyoming. 

In  Missouri,  North  Dakota,  Ohio  and  Texas  they  have  a  law  requiring 
that  agriculture  be  taught  in  rural  schools.  Idaho,  Pennsylvania  and  Utah 
require  only  that  agriculture  be  taught  in  rural  high  schools.  The  follow- 
ing states  give  aid  to  a  department  of  agriculture  in  high  schools:  Iowa, 
Kansas,  Louisiana,  Maine,  Maryland,  Massachusetts,  Mississippi,  Missouri, 
New  York,  North  Dakota,  Texas  and  Wisconsin.  There  is  a  decided 
sentiment  in  favor  of  the  use  of  rural  public  schools  as  centers  for  instruc- 
tion in  those  things  which  are  most  vital  to  the  prosperity  of  the  community 
in  which  these  schools  are  established.  Dairying  being  a  business  so  vital 
to  the  prosperity  of  so  many  of  the  largest  rural  communities,  would  justify 
the  use  of  rural  public  schools  as  places  where  regular  instruction  is  given 
in  management  and  care  of  the  dairy  herd  and  in  the  proper  methods  of 
milk  handling.  In  a  number  of  rural  high  schools  in  the  eastern  states 
this  is  already  being  done. 

The  great  influence  of  the  rural  school  in  developing  better  dairy  farmers 
and  dairy  employees  has  not  yet  been  fully  realized.  As  a  consequence, 
the  Departments  of  Education  of  the  six  states  furnishing  milk  to  New  York 
City  have  not  yet  undertaken  any  widespread  campaign  to  transform  the 
character  of  education  dispensed  through  rural  schools  into  one  better 
adapted  to  the  needs  of  the  communities  in  which  they  are  located.  Some 
of  the  economies  in  milk  production  would  immediately  result  from  the 


78 

establishment  of  educational  courses  of  this  kind.  Others  would  be  more 
remote,  but  in  due  time  of  permanent  value  in  putting  the  business  of  milk 
production  on  a  sound  and  economical  commercial  basis.  The  results  which 
have  been  achieved  by  a  niunber  of  public  schools  in  rural  commvmities 
where  such  a  type  of  education  has  been  practised  are  so  remarkable  that 
they  justify  not  only  the  serious  attention  of  the  educational  authorities  but 
the  conviction  that  herein  lies  one  of  the  most  important  influences  for 
bringing  about  increased  economy  and  efficiency  in  the  production  of  milk. 

Local  Bookkeepers. 

One  suggestion  which  has  been  made  for  bringing  about  economies  in 
milk  production  is  the  establishment  of  a  simple  standard  method  of  keeping 
cost  accounts  on  dairy  farms.  It  has  been  very  commonly  noticed  that  only 
a  small  percentage  of  dairy  farmers  make  any  attempt  to  keep  cost  accounts 
accurately.  Many  systems  of  bookkeeping  have  been  devised  for  the  use  of 
dairy  farms,  some  of  which  are  very  commendable  because  of  their  sim- 
plicity. The  thing  which  has  been  lacking,  however,  is  an  influence  which 
would  bring  about  the  adoption  of  some  one  of  these  good  systems.  It  is 
one  thing  to  devise  a  system  and  quite  another  to  secure  its  adoption  by  the 
dairy  farmers.  As  a  means  of  overcoming  this  one  of  the  large  distributors 
has  suggested  that  some  one  person  in  each  dairy  district  be  designated  as 
the  official  bookkeeper  for  all  of  the  dair3mien  in  that  district.  The  sug- 
gestion is  that  this  person  be  employed  by  the  entire  group  of  dairymen 
for  such  portion  of  his  time  as  would  be  necessary  to  visit  each  dairy  af 
least  once  each  month  and  assist  the  farmer  in  making  entries  of  cost  items 
on  the  blanks  supplied  for  a  standard  method  of  cost  accounts.  It  is  be- 
lieved that  the  expense  of  this  service  to  each  dairyman  would  be  very  small, 
because  the  time  of  the  bookkeeper  would  be  shared  by  a  large  group  of 
dairies.  The  advantages  of  keeping  cost  accounts  are  so  well  known  and 
their  influence  in  bringing  about  increased  economies  and  efficiencies  that 
the  suggestion  of  the  nomination  of  a  local  bookkeeper  in  each  dairy  district 
seems  well  worthy  of  attention. 

Aid  from  Country  Banks. 

It  has  become  a  practice  in  recent  years  for  country  banks  to  assist 
farmers  in  the  purchase  of  high  grade  dairy  cows.  Many  banks  in  the 
states  of  Iowa,  Wisconsin,  Illinois  and  other  western  states  have  for 
several  years  made  a  practice  of  buying  cows  for  dairy  farmers  and  placing 
them  on  dairy  farms  under  easy  financial  conditions,  with  the  understanding 
that  the  farmer  may  use  the  bank  as  a  depository  for  the  money  received 
from  the  production  of  the  cows,  which  in  the  course  of  a  few  months  pay, 
through  the  sale  of  their  milk,  the  full  purchase  price. 

More  recently  this  practice  has  been  taken  up  by  banks  in  Pennsylvania 
and  Massachusetts.  For  example,  the  Plymouth  County  Trust  Company  of 
Brockton,  Massachusetts,  during  the  eighteen  months  ending  September, 


79 

1917,  purchased  13  carloads  of  cows  averaging  25  head  to  the  car  for  dairy- 
men oi  that  district.  For  this  purpose  the  bank  employed  an  experienced 
purchasing  agent,  the  bank  loaning  two  thirds  of  the  value  of  the  cows  on 
notes.  This  bank  asks  a  payment  of  one-third  in  cash  and  accepts  notes 
for  the  remaining  two-thirds.  It  is  obviously  to  the  financial  advantage 
of  the  country  bank  to  increase  the  cow  population  of  their  district  as  a 
direct  method  of  increasing  the  amount  of  money  on  deposit  by  dairy 
farmers. 

City  Cows, 

At  the  present  time  in  the  limits  of  New  York  City  there  are 
located  90  dairies,  containing  4,500  cows  producing  50,000  quarts  of  milk 
daily.  The  list  of  cost  items  for  the  milk  dispensed  by  these  dairies  to  nearby 
consumers  has  eliminated  from  it  certain  cost  items  which  attach  themselves 
to  the  bulk  of  the  supply  furnished  to  this  City  as  follows : 

Hauling  to  the  country  station gg^    S^J  211art 

Country  station  charges   ;  ;•  ;;   • ;;;  ;;^  :0084  per  quart 

HauHng  froin'railroad  station  to  city' 'plant -^^    P«r  ^^^ 

Total   ^^  P^*"  **"*^ 

The  elimination  of  these  four  items  of  expense  amounts  to  2  1/3  cents 
per  quart.  As  an  offset  to  this,  these  city  dairies  have  to  pay  higher  rents, 
taxes,  wages,  and  other  overhead  items. 

The  objection  to  city  cows  is  the  confinement  in  narrow  quarters  with- 
out pasture,  the  nuisance  of  stables  near  dwellings  and  possible  effect  on  the 
health  of  cows  by  city  conditions.  On  the  other  hand,  since  the  cost  of 
grain  and  other  feed  such  as  baled  hay,  beet  pulp,  brewers  grains,  etc.,  is  no 
higher  in  the  city  than  in  the  country,  there  may  be  some  financial  advantages 
to  be  gained  in  the  keeping  of  city  cows  that  justify  a  consideration  of  the 
proposition  from  the  standpoint  of  economics.  There  are  some  students  of 
the  question  who  go  so  far  as  to  suggest  that,  at  least  for  the  use  of  infants 
and  children,  cows,  kept  in  large  units  in  the  outskirts  of  the  city,  under 
first  class  business  management  and  ideal  sanitary  conditions,  would  fur- 
nish a  cheaper  and  cleaner  milk  than  can  be  secured  in  any  other  way.  The 
suggestion  is  novel  but  is  one  which  seems  worthy  of  further  consideration 
both  from  an  economic  and  sanitary  standpoint. 

13.    Economies  in  Distribution. 

Centralizing  Distribution. 

In  the  report  of  the  Milk  Committee  appointed  by  the  Food  Controller 
for  Canada,  published  November  24,  1917,  the  committee  says  that  the  cost 
of  distribution,  or  the  "  distributors*  spread,"  varied,  from  the  evidence  sub- 
mitted, from  2.75c.  to  6.50c.  per  quart  depending  on  local  conditions,  and 
that  this  excessive  spread  is  caused  chiefly  by  the  excessive  number  of 


V 


distributors  and  varies  about  in  the  same  ratio  as  the  number  of  distribu- 
tors. For  example,  in  Ottawa,  where  one  dairy  handles  about  75  per  cent 
of  the  milk  supply,  the  "  spread  "  is  only  3.25c.  per  quart,  while  in  Toronto, 
where  there  are  about  90  distributors,  it  is  5.25c.  per  quart.  The  Committee 
says,  further,  the  effects  of  this  unnecessary  duplication,  are: 

(a)  Excessive  capital  employed. 

(b)  Excessive  dairy  costs, 
(r)     Overlapping  in  delivery. 

(d)  Excessive  loss  in  bottles. 

(e)  Diversion  of  great  numbers  of  men  and  horses  from  pro- 

ductive employment 

(In  addition  may  be  mentioned  duplication  of  administration  costs, 
selling  costs,  properties,  including  real  estate,  buildings  and  machinery,  both 
country  and  city.) 

On  this  subject  Mr.  Weiant,  President  of  the  Borden's  Farm  Products 
Co.,  Inc.,  in  his  testimony  stated :  "  There  are  operating  expenses  in  the 
country  that  are  duplicated  and  could  be  removed.  It  would  be  possible  to 
have  full  cars  come  through  instead  of  part  cars.  Pasteurizing  plants  could 
maintain  a  full  flow  and  at  a  maximum  capacity.  Wagons  could  be  filled  to 
capacity  and  operated  in  a  small  area.  If  the  plan  were  worked  out  com- 
pletely there  would  be  necessarily  no  duplication.  I  believe  if  the  dealers 
are  given  an  opportunity  to  work  on  that  problem  they  will  solve  it." 

The  data  collected  by  this  Committee  shows  that  there  is  duplication  of 
effort  in  the  country  at  collecting  stations,  inefficiency  in  transportation  be- 
cause of  broken  car-load  lots  instead  of  car-load  lots,  duplication  in  hauling 
from  railroad  platforms  to  the  city,  duplication  of  bottling  and  pasteurizing 
in  city  stations,  and,  above  all,  duplication  in  the  delivery  wagons  on  the 
streets. 

Statistics  of  the  delivery  system  suggest  savings  that  would  result  from 
the  elimination  of  competition  and  the  substitution  of  a  single-service  de- 
livery.   The  statistics  for  New  York  City  are  as  follows : 

Bottled  milk  supply 704,318  quarts 

Milk  m  cans 896,405  quarts 

Ketail  wagons  4  975 

Wholesale  wagons  \  1*522 

Average  load  of  retail  wagons '142  quarts 

Average  load  of  wholesale  wagons 14.7  cans 

Investigation  shows  that  the  maximum  load  for  a  retail  wagon  is  428 
quarts,  consequently  if  the  total  volume  of  retail  milk,  amounting  to  704,318 
quarts,  were  carried  on  retail  wagons  handling  only  full  loads,  the  bottled 
milk  of  New  York  City  would  be  handled  by  only  2,243  retail  wagons  in- 
stead of  the  4,978  actually  in  use  at  the  present  time.  This  would  mean  only 
45.3  per  cent  of  the  present  number,  or  a  saving  of  54.7  per  cent  of  the 
total. 


In  wholesale  milk  the  maximum  load  for  a  two-horse  wagon  operated 
by  one  man  is  75  cans  per  day.  If  all  the  wholesale  milk,  amounting  to 
896,405  quarts,  or  22,410  cans,  were  carried  on  wagons  handling  only 
maximum  loads,  the  number  of  wagons  required  would  be  only  300,  as 
compared  with  the  1,522  wholesale  wagons  now  operating.  This  would 
be  a  saving  of  81.3  per  cent. 

These  estimated  savings  of  54.7  per  cent,  on  retail  wagons  and  81.3 
per  cent,  on  wholesale  wagons  are,  of  course,  ideals,  assuming  a  perfect 
delivery  system  in  every  section  of  the  city  and  that  every  wagon  carries  only 
a  full  load.  Under  practical  conditions  this  would  be  impossible,  even  if 
delivery  were  in  the  hands  of  a  single  public  service  corporation. 

For  a  number  of  years  milk  has  been  retailed  in  Philadelphia  for  2  cents 
less  than  in  New  York  City.  Philadelphia  retail  loads  have  averaged  300 
quarts  to  the  wagon,  while  New  York  retail  loads  have  averaged  less  than 
200  quarts  to  the  wagon.  This  difference  in  load  is  chiefly  responsible  for 
the  difference  in  the  retail  price. 

In  the  city  of  Ottawa,  Canada,  75  per  cent,  of  the  business  is  in  the 
hands  of  one  distributing  firm,  which  operates  at  a  margin  of  only  3.25  cents 
above  the  cost  of  production,  as  compared  with  the  margin  of  distribution  in 
Philadelphia  of  five  cents  and  in  New  York  of  seven  cents. 

The  Milk  Committee  appointed  by  the  Food  Controller  for  Canada 
reported  on  November  24,  1917,  in  favor  of  the  "  Unification  and  reorgani- 
zation of  the  milk  distributing  business,"  and  cited  the  experience  in  the 
adoption  of  a  single  delivery  system  by  the  City  of  Regina,  Saskatchewan, 
where  a  net  saving  of  at  least  V/s  cents  per  quart  over  the  previous  cost  of 
milk  resulted  from  the  adoption  of  this  system. 

An  extensive  questionnaire  was  submitted  by  the  Committee  to  all  the 
large  dealers  in  New  York  City  for  the  purpose  of  securing  statistics  regard- 
ing the  location  of  country  and  city  plants,  the  volume  of  business  and  the 
facilities  for  handling  milk,  the  object  being  to  ascertain  the  capacity  of  the 
present  distributing  system  and  the  points  at  which  duplication  was  occur- 
ring. While  several  of  the  large  companies  endeavored  to  answer  the  de- 
tailed questions  contained  in  this  questionnaire,  the  number  of  replies 
received  was  insufficient  to  make  it  possible  for  the  Committee  to  determine 
by  this  method  just  what  saving  could  be  accomplished  by  eliminating  the 
numerous  duplications  resulting  from  present  competitive  conditions. 

Powdered  MUk. 

The  lowest  prices  obtainable  on  powdered  milk  are :  Skim  milk  powder 
in  barrels  of  150  pounds  each,  21  cents  per  pound.  Whole  milk  powder  in 
barrels  of  150  pounds  each,  37  cents  per  pound. 

In  fluid  milk  these  prices  are  equivalent  to  a  little  less  than  4  cents  a 
quart  for  skim  milk  and  about  9 J4  cents  for  whole  milk. 

The  fact  that  this  powder  when  properly  kept  is  almost  imperishable, 
can  be  shipped  long  distances,  and  kept  in  storage,  and  can  be  used  for 


M 


82 

cooking  and  manufacturing  purposes  and  for  practically  all  purposes  for 
which  fluid  milk  is  used,  justifies  its  recommendation  as  a  substitute  for 
fluid  milk  for  that  portion  of  the  milk  supply  which  is  used  for  manufactur- 
ing purposes  and  for  some  cooking  purposes.  The  shortage  in  the  source  of 
production  of  milk  powder  could  well  be  remedied  by  the  development  of 
producing  territory  outside  of  the  limits  of  the  sources  of  fluid  milk  supply. 
It  is  undoubtedly  true  that  many  portions  of  the  South,  prevented  from  fur- 
nishing fluid  milk  by  distance  and  by  climate,  could  on  account  of  the  fertility 
of  the  soil  produce  milk  cheaply  if  markets  were  developed  for  milk  in  pow- 
dered form.  The  use  of  milk  powder  for  a  considerable  percentage  of  the 
market,  not  only  for  manufacturing  but  for  household  and  cooking  purposes, 
would  relieve  the  pressure  of  high  prices  to  some  extent  on  such  consimiers. 

Daylight  Delivery. 

Daylight  delivery  of  milk  refers  to  operation  of  delivery  wagons  dur- 
ing the  morning  hours  after  breakfast,  rather  than  during  the  early  hours 
of  the  day  before  breakfast.  The  delivery  of  milk  in  the  early  morning 
hours  before  breakfast  is  a  relic  of  the  days  in  which  municipalities  received 
their  supply  from  nearby  farms  without  the  advantages  of  refrigeration,  it 
being  customary  for  farmers  to  drive  into  the  city  immediately  after  the 
morning  milking  with  fresh  milk.  The  early  morning  delivery  thus  became  a 
habit.  At  the  present  time,  with  milk  coming  from  distances  of  several 
hundred  miles  and  with  the  refrigerating  facilities  which  now  exist,  there 
is  no  reason  excepting  habit  why  milk  should  be  delivered  before  breakfast. 
In  the  summer  months,  because  among  the  poorer  classes  ice  is  a  luxury,  it 
is  proper  to  make  an  early  morning  delivery,  but  during  at  least  six  months 
of  the  year  it  is  cool  enough  to  prevent  any  disadvantages  through  tempera- 
ture. 

The  City  of  Chicago  since  1906  has  practiced  daylight  delivery  from 
October  1st  to  April  15th.  For  a  number  of  years  in  the  City  of  Boston 
there  has  been  daylight  delivery  during  the  winter  months.  The  City  of 
Philadelphia  adopted  daylight  delivery  on  November  15th  of  this  year. 
There  are  other  cities  in  America  where  this  same  system  has  been  adopted. 
The  advantages  are: 

(1)  Larger  sales  of  milk; 

(2)  Better  collections  of  cash; 

(3)  Better  collections  of  empty  bottles; 

(4)  Less  theft; 

(5)  Better  working  conditions  for  horses  and  drivers; 

(6)  Facilitates  municipal  supervision. 

The  carrying  of  larger  loads  on  the  delivery  wagons  in  itself  means  a 
decided  economy  in  the  cost  of  delivery.  In  Philadelphia,  the  dealers  have 
already  increased  the  loads  on  retail  wagons  and  believe  the  increase  will 
amount  to  25  per  cent.    The  saving  on  bottles  and  on  collections  also  means 


83 

less  expense  to  the  distributor.    There  is  no  reason  why  daylight  delivery 
cannot  be  adopted  immediately  in  New  York  City. 

Retailing  Milk  from  Grocery  Stores. 

In  response  to  a  questionnaire  sent  out  by  the  Committee  to  the  dis- 
tributors of  milk,  replies  were  received  from  nine  of  the  largest  distributors 
stating  the  prices  charged  by  them  for  milk  sold  to  grocery  stores  during  the 
month  of  November,  1917.    The  figures  are  as  follows : 


Dealer. 


Price  per  Quart 
in  40  Quart  Cans. 


Price  per  Quart 
in  Bottles. 


1 
2 
5 
4 

5 

7 
8 
9 


Average 


9H-10C. 
9>4-10c. 

10c. 

10c. 
9H-10C. 

10c. 

10c. 

10c. 

10c. 

10c. 


13c 
12^c. 

13c. 
1254c. 

11J4C 

12-13c. 
13c 
13c 
14c. 

13c 


It  has  been  believed  that  milk  could  be  sold  from  grocery  stores  cheaper 
than  it  could  be  sold  from  retail  wagons  delivering  the  same  directly  to  the 

homes  of  consumers. 

There  is  no  doubt  that  it  costs  the  dealer  less  money  to  carry  milk  to 
the  grocery  stores  than  to  carry  milk  to  the  home.  In  the  above  tabulation, 
for  example,  the  dealers  sell  Grade  *'  B  "  milk  to  grocery  stores  in  glass 
bottles  for  13  cents  per  quart,  while  they  charge  14  cents  per  quart  for  the 
same  milk  to  consumers  at  their  homes. 

Many  grocery  stores  retail  milk  whether  in  bottles  or  in  cans  at  the 
same  price  charged  to  the  store  by  the  dealer. 

Many  of  the  largest  grocerymen  in  New  York  City  have  attended  a 
conference  at  which  they  indicated  their  willingness  to  undertake  to  sell 
milk  from  grocery  stores  at  no  charge  for  delivery  service  because  the 
offering  of  milk  at  less  than  the  retail  price  from  wagons  brings  trade  to 
the  store  for  other  things.  This  is  not  economical  because  the  cost  of  such 
service  must  necessarily  be  added  to  the  cost  of  other  commodities.  From 
the  standpoint  of  infants  and  children,  however,  such  a  philanthropy  might 
be  encouraged  for  the  same  reason  that  the  sale  of  bottle  milk  from  the 
infant  milk  depots  is  encouraged. 

On  the  other  hand,  if  the  grocery  store  should  charge  a  profit  of  1  cent 
per  quart  on  bottle  milk,  it  would  make  the  retail  price  identical  with  the 
retail  price  of  the  same  milk  delivered  from  retail  wagons  to  the  homes. 

A  study  of  the  figures  obtained  by  the  expert  accountant  employed  by 
the  Committee  on  the  books  of  the  Borden's  Farm  Products  Company  relat- 
ing to  the  cost  of  bottle  milk  sold  to  grocery  stores  at  wholesale  shows  that 


il 


even  when  this  milk  is  sold  to  the  storekeeper  by  the  company  for  13  cents, 
there  is  a  loss  to  the  company  of  .004387  cent  per  quart  at  the  present  time. 
One  needs  only  to  reflect  that  the  grocery  store  constitutes  an  additional  item 
or  factor  in  the  delivery  system  to  recognize  that  if  the  grocer  charges  a 
profit  for  himself  it  necessarily  adds  another  cost  item  to  the  cost  of  delivery. 

The  figures  obtained  indicate  that  from  the  standpoint  of  the  milk  con- 
sumer, there  is  not  to  be  expected  any  saving  in  the  retail  price  of  milk 
through  distribution  from  grocery  stores. 

On  the  other  hand,  milk  stores  handling  large  volumes  of  milk  make 
possible  the  delivery  to  them  of  such  large  quantities  of  milk  at  one  opera- 
tion that  the  cost  of  delivery  to  the  dealer  is  greatly  reduced.  The  delivery 
of  an  entire  wagon  load  of  bottle  milk  to  one  milk  store  is  plainly  much 
cheaper  for  the  dealer  than  the  delivery  of  the  same  wagon  load  to  a  chain 
of  grocery  stores  at  some  distance  from  each  other. 

In  the  list  of  cost  items  obtained  by  the  expert  accountant's  audit  of 
the  books  of  the  Borden's  Farm  Products  Company,  concerning  the  sale  of 
milk  from  the  company's  own  milk  stores,  it  is  shown  that  the  cost  of  de- 
livery, even  including  the  expenses  of  operating  the  store  itself,  is  less  than 
the  cost  of  delivering  the  same  milk  to  grocery  stores. 

These  figures  seem  to  justify  the  belief  that  milk  can  be  retailed  from 
niilk  stores  at  a  less  price  than  it  can  be  retailed  from  grocery  stores.  The 
difiFerence,  however,  is  not  equal  to  a  fuU  penny,  but  a  fraction,  and  could 
not  be  of  advantage  to  the  consumer  unless  milk  was  sold  at  a  price  which 
in  some  way  provided  for  the  splitting  of  the  penny  into  at  least  one  half 
penny  amounts.  This  might  be  brought  about  through  the  adoption  of 
tickets,  which  has  already  been  done  in  some  other  cities. 

Loose  milk  from  grocery  stores. 

Milk  in  40-quart  cans  sold  to  grocery  stores  at  10  cents  per  quart  is 
retailed  by  such  stores  at  not  more  than  11  cents  per  quart.  This  is  the 
cheapest  milk  offered  to  the  public,  costing  3  cents  per  quart  less  than  milk 
distributed  in  bottles  from  retail  wagons.  From  a  sanitary  standpoint  it  is 
believed  to  be  unsafe  for  the  use  of  infants  and  children.  In  the  question- 
naire sent  out  by  the  Committee  to  123  cities  in  America,  65  replies  were 
received,  and  without  exception  every  health  officer  condemned  the  sale  of 
loose  milk.  In  not  more  than  3  or  4  cities  was  the  sale  of  loose  milk  per- 
mitted at  all.  In  such  cities  as  Boston  and  Chicago,  the  sale  is  entirely 
prohibited. 


1. 
2. 


C0NCLUS10N& 

Milk  is  the  most  valuable  and  the  cheapest  of  human  foods  even  at 

present  prices. 
For  drinking  purposes  New  York  City  now  uses  only  about  700,000 

quarts  daily.    The  city  should  use  about  2,000,000  quarts  daily  for 

drinking  in  an  ideal  diet. 


85 

3.  The  cost  of  milk  production  at  present  prices  is  7  cents  per  quart  and 

the  prices  asked  by  the  Dairymen's  League  are  justified. 

4.  The  cost  of  distribution  as  shown  by  the  dealers'  accounts  is  justified 

and  not  large  enough  to  prevent  business  losses. 

5.  The  cost  of  production  can  be  reduced  by 

(a)  eliminating  low-producing  cows, 

(b)  collective  hauling  of  milk, 

(c)  collective  buying  of  grain. 

6.  The  cost  of  distribution  can  be  reduced  by  abolishing  competition  and 

duplication  through  centralizing  the  distributing  system  into  a 
single  company  or  public  service  corporation. 


M.  B.  Brown  Printing  &  Binding  Co., 
New  York 


*x^ 


A 


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NEH 


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^m 


['OV  29  199" 


■.U.fO-Witt}fitirr*_ 


71 


m 


F  ' ' 

4 


END  OF 

TITLE 


